FedEx stock pops after raising full-year outlook and beating earnings estimates
FedEx increased its revenue growth forecast to as much as 6.5% as it prepares to spin off its freight business
Kevin Carter/Getty Images
FedEx $FDX stock climbed about 8% in pre-market trading Friday, following the release of third-quarter earnings that topped Wall Street forecasts late Thursday.
FedEx reported adjusted earnings per share of $5.25 for the quarter ended Feb. 28. This figure exceeded the $4.09 to $4.15 expected by analysts, according to CNBC. Revenue reached $24 billion, an 8% increase from $22.2 billion a year earlier. Analysts had estimated revenue between $23.43 billion and $23.49 billion.
Related Content
Management updated the 2026 revenue target to a range of 6.0% to 6.5%, an increase from the earlier goal of 5% to 6%. Annual profit projections were revised upward to between $19.30 and $20.10 per share, surpassing the former $17.80 to $19.00 guidance. The shipping giant trimmed its planned capital expenditures, setting a new cap of $4.1 billion compared to the previous $4.5 billion estimate.
Operating results in the Federal Express segment improved due to higher package yields and cost savings from transformation initiatives. In the U.S., package revenue climbed 10%, and export sales from international markets saw an 8% rise, according to The Wall Street Journal. Daily shipping volumes averaged 18.5 million packages, representing a 3% gain over the prior year. CEO Raj Subramaniam said in a statement that results were driven by disciplined operational execution and the impact of advanced digital solutions.
The June 1 deadline for turning FedEx Freight into an independent public entity is still on schedule. Operating results for that segment decreased during the quarter due to separation costs, higher wages, and lower shipment volumes. FedEx Freight recently completed a $3.7 billion offering of senior notes to help fund the transition. The company now expects permanent cost reductions from its transformation programs and Network 2.0 initiative to exceed $1 billion.
Subramaniam told analysts on a conference call that the company anticipates modest headwinds from the Iran war, according to CNBC. He noted that the Middle East represents a relatively small part of total revenue.