Why Is FedEx (FDX) Up 7.2% Since Last Earnings Report?

Core Viewpoint - FedEx reported strong earnings in Q4, beating estimates and showing year-over-year growth, but there are concerns about future revenue growth and downward revisions in estimates leading up to the next earnings report [2][12][15]. Financial Performance - Quarterly earnings per share (EPS) were $6.07, exceeding the Zacks Consensus Estimate of $5.93 and improving by 12.2% year-over-year [2]. - Revenues reached $22.2 billion, surpassing the Zacks Consensus Estimate of $21.7 billion and showing a 0.5% increase from the previous year [2]. - Operating income increased by 15% to $1.79 billion, with operating margin rising to 8.1% from 7% in the prior year [3]. Cost Management - Operating expenses decreased by 1% to $20.4 billion, benefiting from the DRIVE program and higher volumes [4][3]. - The company achieved structural cost reduction targets, contributing to improved operating income and margin [3]. Segment Performance - FedEx Express segment revenues grew by 1% year-over-year to $18.9 billion, supported by cost reductions and increased export volumes [6]. - FedEx Freight revenues fell by 4% to $2.29 billion, impacted by lower fuel surcharges and increased costs [7]. Liquidity and Shareholder Returns - Cash and cash equivalents at the end of Q4 were $5.50 billion, up from $5.13 billion in the previous quarter, while long-term debt decreased to $19.1 billion [9]. - The company returned nearly $4.3 billion to shareholders in fiscal 2025, including $3 billion in share repurchases and $1.3 billion in dividends [10]. Future Outlook - For Q1 of fiscal 2026, FedEx expects revenue growth to be flat to 2% year-over-year, with diluted EPS anticipated between $2.90 and $3.50 [12]. - The company aims for permanent cost reductions of $1 billion from ongoing transformation programs and plans to prioritize capital spending of $4.5 billion [13]. - FedEx is committed to rewarding shareholders with a 5% dividend increase and a robust share repurchase program [14]. Estimate Revisions - Consensus estimates have trended downward, with a shift of -7.06% noted in the past month [15]. - FedEx currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [17].