FedEx Stock Is at Its Bottom—And It May Be Time to Buy

Core Insights - FedEx is facing challenges but is at the bottom of its decline as its turnaround and optimization strategy gains traction [1] - The planned spin-off of the freight segment is progressing well, with increasing package volume in the core Express segment and improved profitability [2] - The company has a robust capital return outlook, trading at a low valuation with a reliable dividend yield [3] Financial Performance - In fiscal Q4 2025, FedEx reported revenue of $22.2 billion, a 0.5% increase year-over-year, driven by the core Express segment [5] - The Freight segment saw a 3.8% decline, representing about 10% of total business [5] - The company achieved $2.2 billion in DRIVE-related savings and a 5.2% increase in operating income, with adjusted earnings of $6.07, up 12% year-over-year [6] Guidance and Market Sentiment - FedEx issued mixed guidance for Q2, forecasting flat to 2% revenue growth but a weaker earnings forecast of $3.70, which is $0.35 below consensus [7] - Despite the weak earnings forecast, growth is expected to accelerate compared to revenue, with capital return remaining safe [8] - Analysts have mixed responses to FedEx's Q4 results, with a 12-month stock price forecast averaging $285.75, indicating a potential upside of 28.68% [10] Shareholder Returns - FedEx has consistently increased its dividend payments, with a payout ratio suggesting sustainable double-digit growth [4] - Share buybacks have reduced the share count by 4.5% in F2025, enhancing per-share distribution [4] - Institutions own about 85% of FedEx stock, providing a strong support base as they continue to buy [11]