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How Should Investors Approach FDX Stock Post Q3 Earnings Miss?
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On March 20, 2025, FedEx Corporation (FDX - Free Report) posted mixed third-quarter fiscal 2025 (ended Feb. 28, 2025) results. While earnings per share missed estimates, revenues beat the same. The transportation heavyweight also lowered its fiscal 2025 earnings per share outlook, highlighting the weak economic conditions.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
This was the second time that the company missed estimates in the last four quarters.
Quarterly earnings (excluding 75 cents from non-recurring items) of $4.51 per share missed the Zacks Consensus Estimate of $4.65. However, the bottom line improved 16.8% year over year, mainly owing to the cost-reduction benefits from DRIVE program initiatives. Revenues of $22.2 billion came ahead of the Zacks Consensus Estimate of $21.8 billion and improved 2.1% from the year-ago fiscal quarter’s reported figure.
Quarterly earnings were hurt by the challenging conditions prevalent during the three-month period. A shortened holiday season, adverse weather conditions, an early Chinese New Year, and a rise in recession fears following tariff-related tensions dented results.
FedEx now expects revenues to be flat to slightly down year over year versus the prior forecast of approximately flat. The adjusted earnings outlook was lowered to the $18-18.6 per share band from the previously expected range of $19-20 per share. The guidance for capital spending was revised down to $4.9 billion from $5.2 billion.
As a result of the earnings miss and the downbeat guidance for fiscal 2025, earnings per share estimates have moved southward over the past seven days for fourth-quarter fiscal 2025, first-quarter fiscal 2026, fiscal 2025 and fiscal 2026.
Image Source: Zacks Investment Research
FDX Stock’s Disappointing Price Performance
Due to the weakness in package volumes, shares of FDX have declined in double digits over the past year. The Zacks Transportation—Air Freight and Cargo industry and rival United Parcel Service (UPS - Free Report) have performed worse. Fellow industry player Air Transport Services Group has, however, performed better than FDX and UPS in the past year.
1-Year Price Comparison
Image Source: Zacks Investment Research
FDX’s Fundamental Strength
For long-term investors, a single quarter’s results are not so important. They would rather base their investment decision on the underlying fundamentals. FDX scores impressively in this regard, driven by its robust operating model.
FDX’s endeavors to expand its operations are commendable. Prudent investments enable FDX to extend services and solidify its comprehensive offerings. To combat the demand weakness, FDX is focused on the reduction of structural costs through its DRIVE program initiatives. DRIVE initiatives are expected to result in savings worth $2.2 billion in fiscal 2025. The cost-reduction initiatives include reducing flight frequencies, parking aircraft and cutting staff.
The company’s efforts to reward its shareholders are commendable. In June 2024, FedEx raised its quarterly dividend by 10% to $1.38 per share (or $5.52 annually). Dividend stocks like FDX are generally safe bets for creating wealth, as these payouts act as a hedge against economic uncertainty. FDX is also active on the buyback front.
Despite near-term challenges, it is worth noting that the company has the brand and the network to continue generating steady cash flows in the long run.
FDX Stock is Not Expensive
Going by the forward 12-month price/earnings ratio, the company’s shares currently trade at levels lower than its industry and its five-year median. FDX currently has a Value Score of B.
Image Source: Zacks Investment Research
Not an Opportune Time to Buy FDX Stock
There is no doubt that the stock is attractively valued and the company’s shareholder-friendly initiatives are encouraging. However, headwinds like weak package volumes and tariff-induced economic uncertainty cannot be ignored.
Due to these challenges, it is not at all advisable to buy this Zacks Rank #3 (Hold) stock currently. Declining earnings estimates also do not help matters. Investors should monitor the company’s developments closely for an appropriate entry point. For those who already own the stock, it will be prudent to stay invested.
Image: Bigstock
How Should Investors Approach FDX Stock Post Q3 Earnings Miss?
On March 20, 2025, FedEx Corporation (FDX - Free Report) posted mixed third-quarter fiscal 2025 (ended Feb. 28, 2025) results. While earnings per share missed estimates, revenues beat the same. The transportation heavyweight also lowered its fiscal 2025 earnings per share outlook, highlighting the weak economic conditions.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
This was the second time that the company missed estimates in the last four quarters.
FedEx Price and EPS Surprise
FedEx Corporation price-eps-surprise | FedEx Corporation Quote
Brief Recap of FDX’s Q3 Performance & FY25 View
Quarterly earnings (excluding 75 cents from non-recurring items) of $4.51 per share missed the Zacks Consensus Estimate of $4.65. However, the bottom line improved 16.8% year over year, mainly owing to the cost-reduction benefits from DRIVE program initiatives. Revenues of $22.2 billion came ahead of the Zacks Consensus Estimate of $21.8 billion and improved 2.1% from the year-ago fiscal quarter’s reported figure.
Quarterly earnings were hurt by the challenging conditions prevalent during the three-month period. A shortened holiday season, adverse weather conditions, an early Chinese New Year, and a rise in recession fears following tariff-related tensions dented results.
FedEx now expects revenues to be flat to slightly down year over year versus the prior forecast of approximately flat. The adjusted earnings outlook was lowered to the $18-18.6 per share band from the previously expected range of $19-20 per share. The guidance for capital spending was revised down to $4.9 billion from $5.2 billion.
As a result of the earnings miss and the downbeat guidance for fiscal 2025, earnings per share estimates have moved southward over the past seven days for fourth-quarter fiscal 2025, first-quarter fiscal 2026, fiscal 2025 and fiscal 2026.
FDX Stock’s Disappointing Price Performance
Due to the weakness in package volumes, shares of FDX have declined in double digits over the past year. The Zacks Transportation—Air Freight and Cargo industry and rival United Parcel Service (UPS - Free Report) have performed worse. Fellow industry player Air Transport Services Group has, however, performed better than FDX and UPS in the past year.
1-Year Price Comparison
FDX’s Fundamental Strength
For long-term investors, a single quarter’s results are not so important. They would rather base their investment decision on the underlying fundamentals. FDX scores impressively in this regard, driven by its robust operating model.
FDX’s endeavors to expand its operations are commendable. Prudent investments enable FDX to extend services and solidify its comprehensive offerings. To combat the demand weakness, FDX is focused on the reduction of structural costs through its DRIVE program initiatives. DRIVE initiatives are expected to result in savings worth $2.2 billion in fiscal 2025. The cost-reduction initiatives include reducing flight frequencies, parking aircraft and cutting staff.
The company’s efforts to reward its shareholders are commendable. In June 2024, FedEx raised its quarterly dividend by 10% to $1.38 per share (or $5.52 annually). Dividend stocks like FDX are generally safe bets for creating wealth, as these payouts act as a hedge against economic uncertainty. FDX is also active on the buyback front.
Despite near-term challenges, it is worth noting that the company has the brand and the network to continue generating steady cash flows in the long run.
FDX Stock is Not Expensive
Going by the forward 12-month price/earnings ratio, the company’s shares currently trade at levels lower than its industry and its five-year median. FDX currently has a Value Score of B.
Not an Opportune Time to Buy FDX Stock
There is no doubt that the stock is attractively valued and the company’s shareholder-friendly initiatives are encouraging. However, headwinds like weak package volumes and tariff-induced economic uncertainty cannot be ignored.
Due to these challenges, it is not at all advisable to buy this Zacks Rank #3 (Hold) stock currently. Declining earnings estimates also do not help matters. Investors should monitor the company’s developments closely for an appropriate entry point. For those who already own the stock, it will be prudent to stay invested.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.