FedEx (NYSE:FDX) reported fiscal second-quarter results that exceeded market expectations on both earnings and revenue and increased its full-year outlook, pointing to firmer pricing, rising U.S. shipment volumes and continued progress on cost-saving initiatives.

Despite the strong quarterly performance, the delivery group’s shares slipped 1.4% in premarket trading on Friday. Analysts suggested the market reaction reflected some disappointment that the upgrade to full-year guidance was more modest than the scale of the second-quarter outperformance.

For the quarter, FedEx delivered adjusted earnings of $4.82 per share, comfortably ahead of the $4.11 analysts had forecast. Revenue climbed to $23.5 billion, beating consensus estimates of $22.78 billion.

The company said overall operating performance improved as yields strengthened across U.S. domestic and International Priority services, cost-reduction programmes gained traction and U.S. package volumes increased.

These positives were partially offset by higher labour and transportation expenses, the effects of shifting global trade policies and costs linked to grounding the MD11 aircraft fleet.

The core Express (FEC) division recorded stronger operating results, supported by improved pricing, efficiency gains and higher domestic volumes. Margins in the unit expanded by 100 basis points to 7.7%, well above the 6.4% level anticipated by analysts.

In contrast, results at FedEx Freight declined as shipment volumes fell and wage costs rose, alongside hiring related to preparations for its planned separation. The freight business also absorbed $152 million in one-off costs associated with the upcoming spin-off during the quarter.

FedEx confirmed that the separation of FedEx Freight remains scheduled for 1 June 2026, with the standalone company expected to list on the New York Stock Exchange under the ticker FDXF.

Looking ahead to fiscal 2026, FedEx raised its projected revenue growth range to 5%–6%, from a prior forecast of 4%–6%. It also increased its adjusted earnings outlook to between $14.80 and $16.00 per share before mark-to-market pension adjustments, compared with the previous range of $14.20 to $16.00.

On an adjusted basis excluding pension impacts and certain one-off items, the company now expects earnings of $17.80 to $19.00 per share.

“Though well-telegraphed, we were positively surprised by the strength of the F2Q beat which saw FEC profit up nearly 50% YoY on HSD% rev growth and strong earnings flow-through,” said Jefferies analyst Stephanie Moore.
“This said, we think investors will be picky about the FY26 raise being less than the F2Q beat on what we think are well-defined cost headwinds in the 2H,” she added.

FedEx also lowered its expected pension contributions to $275 million, down from as much as $400 million previously, while reaffirming plans for $1 billion in permanent cost reductions and capital expenditure of $4.5 billion.

FedEx stock price

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