Shares of FedEx (FDX) are down in after-hours trading after the delivery services company reported earnings for its fourth quarter of Fiscal Year 2025 that were accompanied by a soft outlook. Earnings per share came in at $6.07, which beat analysts’ consensus estimate of $5.85 per share. In addition, sales increased by 0.5% year-over-year, with revenue hitting $22.2 billion. This beat analysts’ expectations of $21.8 billion but did not seem to be enough for investors.
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Interestingly, FedEx’s express delivery segment saw improved results during the quarter, thanks to cost savings from its DRIVE efficiency program, along with higher shipping volumes in both U.S. and international markets. The company also benefited from stronger pricing (known as base yield). However, some of these gains were reduced by rising transportation and labor costs, fewer operating days in the quarter, and the end of its contract with the U.S. Postal Service.
Meanwhile, FedEx’s freight division saw a decline in performance. This was mainly due to lower fuel surcharge revenues, lighter shipments, rising healthcare expenses, and higher employee wages (which tend to be the firm’s largest expense, as pictured below). The division also faced the challenge of having one less operating day. Still, the impact was somewhat offset by stronger base pricing and a $33 million profit from the sale of a facility.
2026 Outlook
Looking forward, management now expects revenue growth in Q1 2026 to be 0% to 2% year-over-year, compared to expectations of a -1.1% decline. Furthermore, adjusted earnings per share are anticipated to land between $3.40 and $4.00. For reference, analysts were expecting an adjusted EPS of $4.11.
As you can see, EPS guidance was worse than expected, which was enough to disappoint investors and send shares lower in after-hours.
Is FedEx a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on FDX stock based on 12 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average FDX price target of $268.07 per share implies 16.9% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
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