TLDR
- FedEx shares declined 7.6% premarket to $293.12 even after surpassing Q4 earnings and revenue projections
- Fourth quarter revenue reached $25B with adjusted earnings per share of $6.31, exceeding analyst forecasts of $24B and $5.96
- Fiscal year adjusted EPS totaled $20.24, outperforming the $19.86 Wall Street consensus
- Calendar 2026 EPS forecast of $16.90–$18.10 fell short of investor expectations accustomed to stronger numbers
- The freight business spinoff on June 1 slashed approximately $80 from FedEx’s share price and muddies performance comparisons
FedEx delivered fourth quarter results that exceeded Wall Street forecasts across the board, yet the market response was decidedly negative. Shares of FDX plummeted 7.6% during premarket hours Wednesday, hitting $293.12, following a 3.5% decline in Tuesday’s regular session to $317.24.
Revenue for the quarter registered at $25 billion, surpassing the Street’s $24 billion projection. Adjusted earnings per share reached $6.31, comfortably beating the $5.96 consensus estimate. The complete fiscal year concluded in May with adjusted EPS of $20.24, topping both the analyst forecast of $19.86 and the company’s internal guidance range of $19.30 to $20.10.
What triggered the sharp decline?
The shipping giant transitioned to calendar year financial reporting and unveiled its inaugural guidance under this new framework. Management projects 11% revenue expansion compared to 2025, with adjusted EPS ranging from $16.90 to $18.10 for calendar year 2026. This represents a notable decline from the $20.24 fiscal year result, leaving Wall Street analysts scrambling to recalibrate their financial models for accurate comparisons.
“It will be difficult to judge numbers for a few quarters given the noise, but focus will be on fundamental debates,” Morgan Stanley analysts said.
Freight Spinoff Changes the Math
On June 1, FedEx separated its trucking division, FedEx Freight, into an independent entity. Existing shareholders were awarded one FedEx Freight share for every two FedEx shares they owned. This corporate action reduced FedEx’s stock price by approximately $80, with shares trading near $411 at May’s conclusion.
The divestiture removes what had evolved into a lucrative yet increasingly challenging business unit. During FedEx’s March quarterly report, the freight operation generated $1.991 billion of the company’s $24 billion total quarterly revenue.
Melius Research, maintaining a buy rating on FDX, characterized the restructured entity as “a cleaner, more focused parcel business,” noting that freight “had become a clear headwind to overall profitability.”
Margin Pressure in the Core Business
The streamlined organizational structure presents its own challenges. Operating margin within FedEx’s Federal Express division contracted to 7.7%, declining from 8.4% during the same period last year. Rising expenses for workforce compensation, benefits, third-party transportation services, and fuel drove the compression.
Shipment volumes also suffered from the elimination of duty-free “de minimis” privileges for lower-value e-commerce packages associated with Chinese retailers such as Shein and Temu. Evolving U.S. trade regulations and escalating fuel prices connected to geopolitical tensions with Iran have intensified these challenges.
J.P. Morgan acknowledged the optics, noting that “FedEx could experience an overhang during the time it will take for the market to sort through the different moving pieces.”
FedEx Freight, now operating independently under ticker FDXF, climbed 3.44% on Wednesday. Competitor UPS, confronting similar volume challenges, declined 1.31%.
FedEx currently commands a valuation of 14.68 times forward 12-month earnings estimates, marginally above UPS at 14.05.
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