TLDR
- FedEx reported Q3 earnings of $3.74 a share on $22.9 billion in sales, beating estimates of about $3.34 to $3.36.
- The stock fell 2.7% to $296.50 after results, then rose 1.6% to $309.70 in early trading Thursday.
- Full-year EPS guidance is now about $18.30, with revenue growth of 12%.
- US express margin slipped to 6.6% from 6.8% on higher costs for hired truckers.
- FedEx stock is up about 31% year to date, roughly 17 points ahead of the S&P 500.
FedEx (FDX) stock fell 2.7% to $296.50 after the company reported third-quarter results on Wednesday. The drop came even though earnings beat Wall Street estimates.
By early trading Thursday, the stock had rebounded 1.6% to $309.70. Reuters reported that shares fell 3.2% in extended trading before settling at the smaller loss.
FedEx earned $3.74 a share on sales of $22.9 billion. Analysts expected $3.34 to $3.36 a share on sales of $22.7 billion.
Adjusted profit rose 28% from $2.93 a share a year ago. Share buybacks added 2 cents a share to the latest quarter.
Year-over-year comparisons are tricky this time. FedEx spun off its FedEx Freight unit on June 1.
Guidance Raises Questions
FedEx raised its full-year revenue growth forecast to 12% from 11%. It now expects earnings of about $18.30 a share.
Reuters listed the range as $18 to $18.60. Analysts had expected about $17.68 to $17.73.
The numbers for the final quarter did not line up neatly. The new guidance implies fourth-quarter earnings of about $6.33, while Wall Street projects $6.58.
Full-year estimates compiled by FactSet pointed to $5.92 for the quarter. That gap may come from the Freight spinoff. FedEx also changed its year-end to December from May, which could be tripping up data providers.
That’s a lot of math for one earnings night. No wonder the stock couldn’t pick a direction.
Costs Weigh on Margins
US express margin slipped to 6.6% from 6.8% a year earlier. FedEx is paying more for hired truckers, who handle about 10% of capacity.
Record diesel prices and a smaller pool of available drivers have pushed those rates up. Interim CFO Claude Russ said the company expects a bigger impact during the fourth-quarter peak season.
Other costs also weighed on results. These included higher pilot pay, variable compensation and changing US tariff policies.
Domestic revenue grew 10% year over year, helped by pricing and volumes. International revenue rose 17%.
Adjusted operating income was about $1.2 billion, in line with Street estimates. Some analysts pressed the company on why its margins trail those of rival UPS.
Bernstein analyst David Vernon pointed to strong pricing that is offsetting cost inflation. Truist analyst Lucas Servera said FedEx is “building momentum into 2027.”
Through Wednesday’s close, FedEx stock was up about 31% this year. The S&P 500 has gained roughly 14% over the same period.
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