FedEx (FDX) Is Leaner After Its Freight Spin, but Can Earnings Catch Up?

FedEx (NYSE:FDX) is due to report results after the market closes next Wednesday, its first since the fiscal fourth-quarter report this summer. The company reporting will look different from the one investors knew a year ago. Its freight division now trades as a separate stock, and FedEx has moved to a calendar-year schedule.

But a cleaner company is not automatically a cheaper one. Analysts expect FedEx’s earnings to slip this year, yet the stock trades above its own five-year average multiple. The question is whether the cost savings FedEx is chasing arrive fast enough to justify that price.

Federal Express, the segment that moves packages for businesses and online shoppers in the U.S. and abroad, is now the core of the company. The business looks better than it did, but the stock price already reflects part of the improvement.

A Smaller FedEx With a Cost Plan

The latest results show why investors like the new shape. Revenue in the fiscal fourth quarter reached $25.0 billion, up from $22.2 billion a year earlier, and Federal Express earned an adjusted operating margin of 8.9%. FedEx also said it beat its goal of $1 billion in transformation-related cost savings for the year. Before the split, the freight division also paid FedEx a cash dividend of about $4.1 billion.

Over the past five years, revenue grew about 2.48% a year. Earnings per share shrank about 1.01% a year over the same stretch, a record built while the freight business was still inside the company. Against that, FedEx now expects about 11% revenue growth in calendar 2026, measured against a 2025 base that leaves freight out. If you’re interested in more shipping and transport names, we recently compiled a report on 10 Best Logistics Stocks to Buy Right Now.

Earnings Are Expected to Slip This Year

Guidance explains why the next few quarters matter. FedEx expects adjusted earnings of $16.90 to $18.10 a share for calendar 2026. It also calls the rest of this year a transition period, so the company itself is not promising a clean run.

Rising costs are the sticking point for the core business. In its latest release, FedEx said higher prices, cost savings and more export volume lifted the Federal Express margin. But the cost of buying outside transportation, higher wage rates, incentive pay and trade policy took part of those gains back. Those costs don’t go away because the savings program is working, so the savings have to keep outrunning them.

That limits how fast the improvement can show up more than it undoes it. Someone holding the stock is counting on the cost program to win that race, and the next reports will show how much of the gain survives. Investors who want more large, established names can see our ranking of 10 Most Active Blue Chip Stocks to Buy Right Now.

What Investors Are Paying for the Rebound

At 16.82 times estimated calendar 2026 earnings, FedEx trades below the sector median of 19.08 but above its own five-year average of 13.96. Those multiples rest on adjusted earnings, which the company’s outlook puts a little above its GAAP range.

Growth is what makes the price harder to defend. The consensus expects earnings per share to fall 2.33% in 2026, so this year’s numbers don’t back the multiple. It rests on the savings showing up in earnings after the transition period ends. In plain terms, shareholders are paying more than FedEx’s own history asks for, ahead of earnings that are expected to dip before they recover. For investors looking for cheaper ideas, our list of 10 Best Undervalued Stocks to Buy in Octoberis worth a look.

So can earnings catch up to the price? They can, but not on this year’s estimates. FedEx has built a leaner company, and next week’s report will show whether the Federal Express margin is still rising after outside transportation, wages and trade costs take their share.

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This article is originally published at Insider Monkey.