The company continues to eye cost reduction of $1 billion for the fiscal year and capital spending of $4.5 billion.
- The company said on Thursday that the spin-off of its Freight unit into a new publicly traded company is continuing.
- The company’s Q2 revenue and earnings beat estimates.
- FedEx hiked the lower end of its fiscal year 2026 earnings guidance.
FedEx on Thursday reported second-quarter (Q2) earnings and revenue above Wall Street expectation and lifted its full year earnings outlook as it continues with its cost reduction efforts, causing the stock to edge 2% higher after hours.
The package delivery company reported revenue of $23.5 billion for the quarter, as compared to $22 billion in the corresponding quarter of last year, and above a Wall Street estimate of $22.8 billion
Adjusted earnings per share came in at $4.82, above an estimated $4.11.
"We successfully executed our growth strategy and advanced our network transformation, while navigating a highly challenging external environment," CEO Raj Subramaniam said.
The company said that its Express operations results improved in the quarter on higher U.S. domestic and International Priority package yields, continued cost savings, lower business optimization costs, and increased U.S. domestic package volume. However, the company also flagged headwinds from global trade policy changes, higher wage rates and increased purchased transportation rates.
Freight Segment Spinoff
The company said on Thursday that the spin-off of its Freight unit into a new publicly traded company is continuing. The spin off is expected to be executed on June 1, 2026 and once separate, FedEx Freight will operate as a separate public company listed on the New York Stock exchange.
In the second quarter, Freight segment results decreased due to lower shipments, higher wage rates, and the hiring of additional sales professionals in preparation for the company's spin-off. The segment also incurred spin-off related costs of $152 million in the quarter.
Share Repurchase
The company said that it completed $276 million in share repurchases via the open market in the quarter. The company repurchased about 1.2 million shares, benefitting second quarter results by $0.05 per diluted share.
The company now intends to continue evaluating repurchasing additional shares during the remainder of fiscal 2026.
Outlook
The company now expects fiscal 2026 revenue growth rate of 5-6%, up from its previous forecast of 4-6%. Adjusted and diluted earnings per share is expected to be $17.80 to $19.00 per share, up from the previously expected $17.20 to $19.00 range. This is higher than the $18.22 estimated by analysts at the midpoint.
The company continues to eye cost reduction of $1 billion for the fiscal year and capital spending of $4.5 billion while prioritizing investment in network optimization and efficiency improvement, including fleet and facility modernization and automation.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment around FDX jumped from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours, while message volume rose from ‘high’ to ‘extremely high’ levels
A Stocktwits user opined that the earnings are already priced into the stock and urged to sell.
Another cheered the earnings as a solid beat.
FDX stock is up by 2% this year and by about 5% over the past 12 months.
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