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FedEx Earnings Beat Estimates. Why the Results Were a Relief for the Stock.

Sep 18, 2025 02:00:00 -0400 by Al Root | #Transportation #Earnings Report

FedEx expects 4% to 6% revenue growth for the full year. (David Dee Delgado/Getty Images)

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Wall Street will likely use the words better-than-feared, resilient, and relief to describe the U.S. shipping business after FedEx reported fiscal first-quarter earnings on Thursday. That’s good news given how pessimistic investors have been.

The stock, however, is barely benefiting.

FedEx’s adjusted earnings per share landed at $3.83 from sales of $22.2 billion on Thursday. Wall Street was looking for EPS of $3.63 from sales of $21.7 billion, according to FactSet.

For the full year, FedEx expects 4% to 6% revenue growth. Wall Street currently projects 1% growth. Adjusted EPS is expected to land between $17.20 and $19. The $18.10 midpoint isn’t too far from the $18.36 projected by analysts.

FedEx shares rose about 6% in after-hours trading, but gained 2.3% on Friday, closing at $231.75, while the S&P 500 and Dow Jones Industrial Average rose 0.5% and 0.4%, respectively.

A year ago, in the first fiscal quarter of 2025, FedEx reported earnings per share of $3.60 from sales of $21.6 billion. Wall Street expected essentially no sales growth. Generating growth has been a struggle for logistics providers lately. Volumes have been impacted by a post-Covid shipping slowdown and higher costs due to tariffs.

New headwinds worried the Street, too. Evercore ISI analyst Jonathan Chappell and BofA Securities analyst Ken Hoexter recently cut their ratings on FedEx stock to Hold from Buy, citing pressure on delivery volumes. That is partly due to President Donald Trump’s executive order that ends the tariff-free treatment of “de minimis” parcels—small, low-value packages that companies such as Temu and Shein had been able to ship from China to the U.S. without paying taxes and duties on them.

Hoexter’s price target for FedEx stock went to $240 from $245. Chappell reduced his price target to $243 from $249 a share.

Policy changes appeared to have an impact on international business. FedEx’s international volumes fell 3% year over year, but U.S. numbers looked solid. Domestic package volumes rose 5%. Domestic package revenue grew 8% year over year.

Still, FedEx isn’t earning money like it was in fiscal year 2022, when EPS topped $20, but expectations coming into the quarter were low. The de minimis problem also led Susquehanna analyst Bascome Majors to cut his fiscal year 2026 EPS estimate by 90 cents to $17.40 ahead of earnings. J.P. Morgan analyst Brian Ossenbeck wrote recently that he was taking a “negative view on FedEx into the earnings release,” citing stagnant business-to-business demand and weak consumer trends. He cut his full-year 2026 estimates to $17.50 from $18.20.

Ossenbeck called the quarter “solid” in a Friday report. Still, he cut his price target $1 to $284 a share.

Those cuts came from bullish analysts. Both Ossenbeck and Majors rate FedEx stock Buy and have $285 price targets for the stock. Overall, 59% of analysts covering FedEx stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for FedEx stock is about $263.

Investors don’t seem ready to embrace a shipping bottom, despite the starting point for FedEx stock. Coming into Thursday trading, FedEx stock was down roughly 24% over the past 12 months. Shares had declined after the past four quarterly reports, losing an average of about 6%.

In June, FedEx reported adjusted earnings per share of $6.07 from sales of $22.2 billion. Wall Street was looking for earnings per share of $5.87 from sales of $21.8 billion, according to FactSet. Earnings were better than expected, but FedEx didn’t provide typical full-year earnings-per-share guidance in its news release. The economic outlook was too uncertain.

Instead, the company provided guidance for the quarter just reported. Now, full-year guidance is back. It’s another sign that some of the uncertainty plaguing shipping has passed.

Write to Al Root at allen.root@dowjones.com