FedEx’s fourth quarter was marked by solid execution amid a complex environment, as the company surpassed Wall Street’s revenue and profit expectations. Management attributed the performance to strength in U.S. domestic package services, continued progress in cost reductions, and resilience in B2B segments. CEO Raj Subramaniam credited the company’s ability to “mitigate the operational and financial impacts of the MD-11 groundings” and emphasized that almost half of revenue growth came from B2B services, despite persistent headwinds such as weak industrial demand and changes in global trade policy.
Is now the time to buy FDX? Find out in our full research report (it’s free for active Edge members).
FedEx (FDX) Q4 CY2025 Highlights:
- Revenue: $23.47 billion vs analyst estimates of $22.79 billion (6.8% year-on-year growth, 3% beat)
- Adjusted EPS: $4.82 vs analyst estimates of $4.11 (17.2% beat)
- Adjusted EBITDA: $2.68 billion vs analyst estimates of $2.48 billion (11.4% margin, 8.2% beat)
- Management raised its full-year Adjusted EPS guidance to $18.40 at the midpoint, a 1.7% increase
- Operating Margin: 5.9%, up from 4.8% in the same quarter last year
- Market Capitalization: $69.57 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From FedEx’s Q4 Earnings Call
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Brandon Oglenski (Barclays) asked about the drivers of incremental market share in domestic B2B and B2C segments. Executive Vice President Brie Carere emphasized the balanced push between B2B and B2C, crediting “rate discipline and capture on surcharges” as key contributors to margin expansion.
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Jonathan Chappell (Evercore ISI) inquired about the consistency and sources of B2B revenue growth. Carere clarified that growth was driven by a combination of new business, increased share of wallet, and improved small business B2B performance, not a single factor.
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Richa Harnain (Deutsche Bank) asked about the additional service costs embedded in transformation programs and how long these might persist. CEO Raj Subramaniam noted that efficiency gains typically materialize within three to six months after integration, and these are already reflected in both short- and long-term forecasts.
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Chris Wetherbee (Wells Fargo) pressed for details on duplicative costs related to the FedEx Freight spin-off. CFO John Dietrich estimated that about one-third of the $300 million EBIT decline is due to separation expenses, with the remainder from industry softness.
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Brian Ossenbeck (JPMorgan) sought clarification on the magnitude and timing of incremental costs from the MD-11 grounding. Dietrich responded that costs would peak in the third quarter, with aircraft expected to return to service in the fourth quarter.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the pace and operational benefits of Network 2.0 facility rollouts and footprint reduction, (2) recovery signals in the FedEx Freight segment as industrial trends evolve, and (3) further execution on B2B and healthcare vertical strategies. We will also track the return of the MD-11 fleet and the effects of ongoing cost initiatives on margins.
FedEx currently trades at $295.25, up from $287.12 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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