Core Viewpoint - FedEx Corporation (FDX) is expected to report its fourth-quarter fiscal 2025 results on June 24, 2025, with earnings estimated at $5.94 per share, reflecting a 9.8% increase year-over-year, while revenues are projected at $21.7 billion, indicating a 1.9% decline from the previous year [1][2][8]. Earnings Performance - The Zacks Consensus Estimate for FDX's fourth-quarter earnings has been revised downward by 1.5% in the past 60 days [2]. - FDX has a mixed earnings surprise history, with an average surprise of -5.79% across recent quarters [3][4]. Revenue and Demand Factors - Average daily shipments are expected to be negatively impacted by weak demand, adverse weather conditions, and recession fears due to tariff-related tensions [5]. - The Express unit, FDX's largest segment, is projected to see a revenue decline of 3.2% compared to the fourth quarter of fiscal 2024 [6][8]. Cost Management Initiatives - Cost-reduction initiatives under the DRIVE program are anticipated to lower salary and operating expenses by 2.1% and 4.4%, respectively, compared to the previous year [7][8]. - The DRIVE program aims for $4 billion in cost savings by fiscal 2025 through improved efficiencies and technology-focused consolidation [16]. Stock Performance and Valuation - FDX shares have declined 17.1% in the fourth quarter of fiscal 2025, slightly underperforming the Zacks Transportation—Air Freight and Cargo industry's decline of 16.9% [11]. - FDX is trading at a discount based on forward 12-month Price/Sales (P/S) compared to the industry average and UPS, with a Value Score of B [13]. Shareholder Returns - In June 2025, FedEx raised its quarterly dividend by 5.1% to $1.45 per share, indicating a commitment to rewarding shareholders despite current challenges [17]. Long-term Outlook - The company has a long-term earnings growth rate of 10.7%, which is higher than the industry's 9.1%, suggesting strong potential despite current market uncertainties [18].

Core Insights - FedEx Corporation has announced a 5.1% increase in its quarterly dividend, raising it to $1.45 per share, marking the fifth consecutive year of dividend hikes [1][9] - The company has executed $2.52 billion in share repurchases in the first nine months of fiscal 2025, surpassing the total for the entire fiscal year 2024 [5][9] - FedEx's stock is currently trading at a low price/sales ratio of 0.6, indicating potential undervaluation compared to the sector average of 0.96 [7][8] Dividend and Shareholder Returns - The quarterly dividend will be paid on July 8, 2025, to shareholders of record as of June 23, 2025 [2] - Dividends have increased significantly from $793 million in 2022 to $1.26 billion in 2024, with $1.01 billion already distributed in the first three quarters of fiscal 2025 [3] Capital Allocation Strategy - FedEx's aggressive capital allocation strategy aims to enhance shareholder returns through both dividends and share repurchases [3][5] - The company’s buyback program suggests management views its stock as undervalued and aims to improve per-share metrics [5] Market Position and Performance - The recent multi-year delivery deal with Amazon is expected to provide a significant boost to FedEx's domestic market presence and operational efficiency [10][11] - Despite the positive impact of the Amazon deal, FedEx shares have faced declines, although they have outperformed rival UPS over the past year [12] Financial Outlook and Challenges - FedEx is experiencing weak EPS forecasts and rising costs due to macroeconomic pressures, which are affecting its Freight segment [9][15] - The company has issued a lackluster revenue forecast for fiscal 2025, projecting flat or slightly declining revenues year over year [16] - Operating expenses increased by 2% year-over-year in Q3 fiscal 2025, driven by a 57% rise in business optimization costs [17] Investor Sentiment - Analysts have revised earnings estimates downward due to ongoing challenges, leading to negative sentiment surrounding FedEx stock [19][20] - The combination of weak current performance and uncertain future prospects raises concerns for potential investors [20]

Core Viewpoint - The recent temporary reduction of tariffs between the United States and China has raised hopes for easing global trade tensions, which is beneficial for United Parcel Service (UPS) [1] Financial Performance - UPS reported Q1 2025 earnings of $1.49 per share, exceeding the Zacks Consensus Estimate of $1.44, marking a 4.2% year-over-year improvement [3] - Revenues for Q1 2025 reached $21.5 billion, surpassing the Zacks Consensus Estimate of $21.1 billion, but showed a 0.7% decline year-over-year [3] - U.S. Domestic Package revenues slightly increased to $14.46 billion despite a decline in volume, while International Package revenues rose 2.7% year-over-year to $4.37 billion due to a 7.1% increase in average daily volume [4] - Supply Chain Solutions revenues fell 14.8% year-over-year to $2.71 billion, primarily due to the divestiture of Coyote Logistics [4] Future Guidance - UPS anticipates a second-quarter adjusted operating margin of approximately 9.3% and revenues around $21 billion [5] - The effective tax rate is expected to be in the range of 23-23.5% [5] - Average daily volume for the U.S. Domestic segment is projected to decline by 9% in the June quarter, with International Package revenues expected to decrease roughly 2% year-over-year [5] Market Challenges - UPS faces revenue weakness due to geopolitical uncertainty and high inflation, negatively impacting consumer sentiment and growth expectations [7] - A slowdown in online sales and soft global manufacturing activity further complicate the situation [8] - High labor costs from agreements with the Teamsters union and rising capital expenses are expected to limit profit margins [8] - UPS shares have underperformed compared to the Zacks Transportation—Air Freight and Cargo industry, with a year-to-date decline of 32.6%, which is steeper than the industry's 25.5% drop [12] Earnings Estimates - The Zacks Consensus Estimate for UPS' second-quarter and third-quarter 2025 earnings, as well as full-year 2025 and 2026 earnings, has decreased over the past 60 days [13] - The current estimate for Q2 2025 earnings is $1.67, down from $1.84 30 days ago, reflecting a downward trend in earnings revisions [14] Valuation - UPS is trading at a forward 12-month Price/Sales ratio of 0.97X, slightly lower than the industry's 0.98X, indicating it may be undervalued compared to peers [14]

Core Viewpoint - United Parcel Service, Inc. (UPS) reported first-quarter 2025 earnings of $1.49 per share, exceeding the Zacks Consensus Estimate of $1.44 and showing a year-over-year increase of 4.2% [1] - Revenues for the quarter were $21.5 billion, surpassing the Zacks Consensus Estimate of $21.1 billion but reflecting a 0.7% decline year over year [1] Financial Performance - U.S. Domestic Package revenues reached $14.46 billion, a 1.4% year-over-year increase, driven by air cargo growth and a 4.5% rise in revenue per piece, despite a decline in volume [3] - The segment's operating profit (adjusted) grew 19.3% year over year to $1.01 billion, with an adjusted operating margin of 7% [3] - International Package division revenues totaled $4.37 billion, up 2.7% year over year, supported by a 7.1% increase in average daily volume, although adjusted operating profit fell 4.1% to $654 million, with a 15% operating margin [4] - Supply Chain Solutions revenues decreased 14.8% year over year to $2.71 billion due to the divestiture of Coyote, with adjusted operating profit down 55% to $98 million and an adjusted operating margin of 3.6% [5] - The overall adjusted operating margin for UPS was 8.2% [5] Strategic Outlook - CEO Carol Tomé emphasized the company's commitment to leveraging its integrated network and trade expertise to navigate the dynamic trade environment, while also focusing on cost reduction and network reconfiguration [2] - UPS is not providing updates to its previously issued consolidated full-year outlook due to macroeconomic uncertainties [6] Industry Context - UPS holds a Zacks Rank of 3 (Hold), indicating a neutral outlook in the current market [8] - The company is positioned to benefit from increased e-commerce, automation, and outsourcing trends, which may enhance its performance [7]

Group 1 - UPS reported quarterly earnings of $1.49 per share, exceeding the Zacks Consensus Estimate of $1.44 per share, and showing an increase from $1.43 per share a year ago, representing an earnings surprise of 3.47% [1] - The company posted revenues of $21.55 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.30%, although this is a decrease from year-ago revenues of $21.71 billion [2] - UPS has surpassed consensus EPS estimates three times over the last four quarters, but has only topped consensus revenue estimates once in the same period [2] Group 2 - The stock has underperformed, losing about 23% since the beginning of the year, compared to a decline of 6% in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.84 on revenues of $21.34 billion, and for the current fiscal year, it is $7.68 on revenues of $87.9 billion [7] - The Transportation - Air Freight and Cargo industry, to which UPS belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Core Viewpoint - United Parcel Service (UPS) has experienced significant stock declines, raising questions about potential buying opportunities amidst ongoing challenges in demand and economic uncertainty [1][4]. Group 1: Stock Performance - UPS shares have declined 23.5% year-to-date, which is in line with the Zacks Transportation—Air Freight and Cargo industry's 21.1% fall and a 22.2% dip in shares of GXO Logistics [1]. - Over the past year, UPS shares have fallen 33.7%, worse than the industry's 27% decline, with GXO Logistics and FedEx down 32% and 23.2%, respectively [4]. Group 2: Factors Hurting UPS Stock - Demand Slowdown: UPS anticipates average daily volumes to decrease by 8.5% in 2025 compared to 2024, driven by a decline in shipping demand and a slowdown in online sales in the U.S. [5]. - Revenue Projections: For full-year 2025, UPS expects revenues of $89 billion, significantly below the Zacks Consensus Estimate of $94.6 billion and lower than 2024's actuals of $91.1 billion [6]. - Economic Uncertainty: Rising inflation and tariff concerns have created market volatility, with fears of economic slowdown impacting UPS's outlook [7][8]. Group 3: Dividend Sustainability - UPS announced a 0.6% increase in its quarterly dividend to $1.64 per share, raising concerns about the sustainability of this payout given an elevated dividend payout ratio of 84% [9]. - Free cash flow has been declining, with projections of $5.7 billion in 2025, barely covering expected dividend payments of approximately $5.5 billion [11]. Group 4: Valuation and Earnings Estimates - UPS stock is trading at a forward sales multiple of 0.93, which is considered expensive compared to industry peers [12]. - Recent earnings estimates for UPS have been revised downward, indicating a negative trend in earnings expectations for 2025 [16]. Group 5: Expansion Efforts - UPS is pursuing expansion by acquiring Estafeta, a Mexican express delivery company, and enhancing export services from Kyushu, which are seen as positive steps for long-term growth [18].

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering GXO Logistics (GXO) , which belongs to the Zacks Transportation - Air Freight and Cargo industry.This contract logistics provider has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 3.83%.For the most recent quarter, GXO Logistics was ...

Core Viewpoint - FedEx Corporation (FDX) appears attractive from a valuation perspective, trading at a forward price-to-sales (P/S) ratio of 0.56, which is lower than the Zacks Transportation—Air Freight and Cargo industry, the S&P 500, and its competitor United Parcel Service (UPS) [1] Financial Performance - FedEx reported lower-than-expected earnings per share (EPS) of $4.51 for Q3 fiscal 2025, missing the Zacks Consensus Estimate of $4.65, primarily due to weak demand and challenging conditions [5][6] - Revenues for the quarter were $22.2 billion, exceeding the Zacks Consensus Estimate of $21.8 billion and showing a 2.1% year-over-year improvement [6] - Average daily shipments fell by 5% year-over-year, influenced by a shortened holiday season, adverse weather, and rising recession fears [5] Earnings Outlook - FedEx has revised its fiscal 2025 EPS outlook down to a range of $18-18.6 from the previous $19-20, marking the third downward adjustment [7] - Revenue expectations have also been adjusted to flat or slightly down year-over-year, compared to prior forecasts of being approximately flat [7] - Earnings estimates for upcoming quarters have decreased over the past 30 days, reflecting the company's ongoing challenges [8][9] Stock Performance - FDX shares have declined over 20.6% in the past year, underperforming compared to UPS and GXO Logistics, which saw declines of 31% and 32%, respectively [11][14] - The stock's performance has been negatively impacted by weak package volumes [11] Strategic Initiatives - FedEx is implementing cost-reduction measures through its DRIVE program, expected to yield savings of $2.2 billion in fiscal 2025, which includes reducing flight frequencies and cutting staff [16] - The company has increased its quarterly dividend by 10% to $1.38 per share, indicating a commitment to shareholder returns [17] Investment Considerations - Despite attractive valuation and shareholder-friendly initiatives, current headwinds such as weak package volumes and economic uncertainty suggest that it may not be an opportune time to buy FDX stock [18][19]

Core Viewpoint - United Parcel Service (UPS) and FedEx (FDX) dominate the air freight and cargo industry, with market capitalizations of $93.3 billion and $58 billion respectively, but both companies are facing significant challenges in terms of revenue growth and operational efficiency [1]. UPS Summary - UPS has been experiencing revenue weakness due to geopolitical uncertainty and high inflation, impacting consumer sentiment and growth expectations [2]. - The company expects average daily volumes to decrease by 8.5% in 2025 compared to 2024, with projected revenues of $89 billion, significantly below the Zacks Consensus Estimate of $94.6 billion [3]. - UPS anticipates reducing volumes with its largest customer, Amazon.com, by over 50% by June 2026, and further cuts in guidance may occur due to tariff-related tensions [3]. - In February 2024, UPS announced a 0.6% increase in its quarterly dividend to $1.64 per share, raising concerns about the sustainability of its elevated dividend payout ratio of 84% [4]. - Free cash flow has declined from a high of $9 billion in 2022, with expectations of generating $5.7 billion in 2025, barely covering projected dividend payments of $5.5 billion [5][6]. - UPS is expanding its network through acquisitions, including Estafeta in Mexico and a deal with Ninja Van Malaysia, to capitalize on cross-border opportunities [7]. - At the end of 2024, UPS had cash and cash equivalents of $6.3 billion against long-term debt of $19.4 billion, resulting in a debt-to-capital ratio of 0.54, slightly above the industry average [8]. FedEx Summary - FedEx is implementing a companywide cost realignment initiative called DRIVE, expected to yield savings of $2.2 billion in fiscal 2025 after $1.8 billion in fiscal 2024 [9]. - The company raised its quarterly dividend by 10% to $1.38 per share in June 2024 and is also active in share buybacks [10]. - FedEx has lowered its adjusted earnings guidance for fiscal 2025 to a range of $18-18.6 per share, with revenues expected to be flat or slightly down year over year [11]. - Despite challenges, FedEx has a strong brand and network, which are expected to generate steady cash flows in the long run [12]. - At the end of the third quarter of fiscal 2025, FedEx had cash and cash equivalents of $5.1 billion against long-term debt of $19.5 billion, resulting in a debt-to-capital ratio of 0.43, indicating a stronger equity position compared to UPS [13]. Price Performance and Valuation - Over the past year, UPS shares have declined by 26.6%, underperforming the industry, while FedEx shares have decreased by 11.1%, outperforming its industry [14]. - UPS is trading at a forward sales multiple of 1.06X, above the industry average of 1X, while FedEx's forward sales multiple is at 0.65X [16]. - The Zacks Consensus Estimate for UPS indicates a 3% year-over-year decline in 2025 sales, while FedEx's estimate suggests flat sales with a 3.3% growth in earnings [19][21]. - FedEx appears more attractive than UPS from a valuation standpoint, with projected earnings growth of 11.5% over the next five years compared to UPS's 9.3% [23].

Core Viewpoint - FedEx Corporation reported mixed results for Q3 fiscal 2025, with earnings per share missing estimates while revenues exceeded expectations, leading to a lowered earnings outlook due to weak economic conditions [1][4][6]. Financial Performance - Q3 earnings per share were $4.51, missing the Zacks Consensus Estimate of $4.65, but improved 16.8% year over year due to cost-reduction benefits from the DRIVE program [4]. - Revenues reached $22.2 billion, surpassing the Zacks Consensus Estimate of $21.8 billion, and increased by 2.1% compared to the same quarter last year [4]. Economic Challenges - The quarterly performance was impacted by a shortened holiday season, adverse weather, an early Chinese New Year, and rising recession fears due to tariff-related tensions [5]. - FedEx now anticipates revenues to be flat to slightly down year over year, revising its adjusted earnings outlook to a range of $18-18.6 per share from the previous $19-20 per share [6]. Market Reaction - Following the earnings miss and lowered guidance, earnings per share estimates have declined for upcoming quarters [7]. - FedEx shares have experienced a double-digit decline over the past year, although the Zacks Transportation—Air Freight and Cargo industry and rival UPS have performed worse [9]. Strategic Initiatives - FedEx is focusing on cost reduction through its DRIVE program, which is expected to yield savings of $2.2 billion in fiscal 2025 by reducing flight frequencies, parking aircraft, and cutting staff [13]. - The company raised its quarterly dividend by 10% to $1.38 per share in June 2024, indicating a commitment to rewarding shareholders despite current challenges [14]. Valuation - FedEx shares are currently trading at lower levels compared to its industry and five-year median based on the forward 12-month price/earnings ratio, with a Value Score of B [15].