Why Is FedEx (FDX) Up 7.2% Since Last Earnings Report?

It has been about a month since the last earnings report for FedEx (FDX). Shares have added about 7.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is FedEx due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.Earnings Beat at FedEx in Q4Quarterly earnings (excluding 81 cents from non-recurring items) of $6.07 per share beat the Zacks Consensus Estimate of $5.93 as well as improved 12.2% year over year. Share repurchases boosted fourth quarter earnings by 28 cents per share.Revenues of $22.2 billion came ahead of the Zacks Consensus Estimate of $21.7 billion and improved 0.5% from the year-ago fiscal quarter’s reported figure.Quarterly results benefited from cost reduction benefits from the DRIVE program, higher volume at Federal Express, and higher base yield at each transportation segment.Operating income, on a reported basis, increased 15% to $1.79 billion from the year-ago fiscal quarter’s reported number. Operating margin rose to 8.1% from 7% in the year-ago reported quarter. Operating income and margin improved in the fiscal fourth quarter, as the company achieved its DRIVE structural cost reduction targets.Operating expenses (reported basis) decreased by 1% to $20.4 billion.Segmental Performance During the QuarterFederal Express and FedEx Freight now represent the company's major service lines and constitute its reportable segments. Further, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment.FedEx Express segment’s revenues grew 1% year over year to $18.9 billion. The Federal Express segment was aided by cost reduction benefits from DRIVE, increased U.S. and international export volume, and higher base yield. These factors were partially offset by higher purchased transportation and wage rates, one fewer operating day, and the expiration of the U.S. Postal Service contract. Our estimate is pegged at $18.1 billion.FedEx Freight revenues fell 4% from the year-ago fiscal quarter’s reported figure to $2.29 billion (in line with our model estimate figure). The FedEx Freight segment was hurt by lower fuel surcharges, reduced weight per shipment, higher healthcare costs, increased wage rates and one fewer operating day. These factors were partially offset by higher base yield and a $33 million gain on the sale of a facility.Average daily shipments fell 1% year over year. Capital expenditures for the reported quarter came in at $1.47 billion.LiquidityFedEx exited fourth-quarter fiscal 2025 with cash and cash equivalents of $5.50 billion compared with $5.13 billion at the end of the prior quarter. Long-term debt (less current portion) was $19.1 billion compared with $19.5 billion at the end of the prior quarter.During fiscal 2025, FDX returned almost $4.3 billion to shareholders, which includes $3 billion of share repurchases (above the original $2.5 billion stock repurchase plan) and $1.3 billion of dividend payments. Repurchases during fiscal 2025 totaled almost 10.9 million shares or 4.5% of the shares outstanding at the beginning of the year. As of May 31, 2025, FDX had $2.1 billion available for repurchases under its 2024 stock repurchase authorization.OutlookFor the first quarter of fiscal 2026, FedEx expects revenue growth in the range of flat to 2% rate on a year-over-year basis. Effective tax rate (ETR) is estimated around 25%.Diluted earnings per share are anticipated between $2.90 and $3.50, and after excluding costs related to business optimization initiatives and the planned spin-off of FedEx Freight, EPS is expected between $3.40 and $4.00.For full-year fiscal 2026, FedEx anticipates permanent cost reductions of $1 billion from the DRIVE and Network 2.0 transformation programs. Pension contributions are now expected to be up to $600 million, compared with $800 million in fiscal 2025. FDX anticipates capital spending of $4.5 billion, prioritizing investments in network optimization and efficiency improvement, which includes fleet and facility modernization and automation.For fiscal 2026, FedEx stays focused on rewarding its shareholders, including the previously announced 5% dividend hike. The company also aims to continue a robust share repurchase program.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -7.06% due to these changes.VGM ScoresAt this time, FedEx has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FedEx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FedEx Corporation (FDX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks