We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The transportation giant exits the September-end quarter amid higher wage and purchased transportation costs, expenses related to the new pilot contract and lingering stranded costs following the FedEx Freight spin-off. Although revenue momentum and transformation-related savings are likely to have provided some support, these cost pressures may have constrained profitability.
The Zacks Consensus Estimate for the third-quarter 2026 earnings has been revised downward by 30.6% over the past 60 days to $3.24 per share. The Zacks Consensus Estimate for 2026 revenues is pegged at $92.14 billion, indicating a 2.27% increase from 2025 actuals.
Factors Likely to Have Influenced FDX’s Q3 Performance
Higher Operating Costs: Wage inflation and purchased transportation expenses are likely to have weighed on FedEx’s profitability. Management’s calendar 2026 outlook incorporates approximately $2.6 billion of higher base expenses stemming from increased wage and purchased transportation rates and other inflationary factors.
Pilot Contract Expenses: The new pilot agreement is another likely cost headwind. FedEx expects the ratification of the contract to create an approximately $200 million expense headwind in calendar 2026, with the agreement becoming effective June 29.
Stranded Costs Following Freight Spin-Off: Costs remaining after the separation of FedEx Freight may also have limited margin expansion. FedEx estimated roughly $350 million of stranded costs after transferring certain expenses to FedEx Freight and expects to eliminate about $100 million of those costs during calendar 2026.
Seasonality and Slower Domestic Growth: The September quarter is traditionally FedEx’s weakest from an absolute profitability standpoint. Management had also expected the U.S. domestic growth rate to decelerate as the company lapped strong prior-year new-business onboarding, while Ground Economy volumes were projected to decline at a low-single-digit rate.
Partly offsetting these pressures, continued Network 2.0 savings, healthy base pricing and demand for premium B2B services are likely to have provided some support. FedEx remains on track to achieve nearly $1 billion of Network 2.0-related savings by the end of calendar 2026.
What Our Model Says About FDX
Our proven model does not conclusively predict an earnings beat for FedEx this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
FedEx has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
UPS is scheduled to report third-quarter 2026 earnings on Oct. 28. The Zacks Consensus Estimate for third-quarter 2026 earnings has remained flat at $1.63 per share over the past 60 days. UPS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, with the average beat being 12.4%.
Kirby Corporation (KEX - Free Report) has an Earnings ESP of +1.87% and a Zacks Rank #3 at present. KEX is scheduled to report third-quarter 2026 earnings on Oct. 28.
The Zacks Consensus Estimate for third-quarter 2026 earnings has been revised upward by 0.51% to $1.96 per share over the past 60 days. KEX’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark on the other occasion. The average beat is 2.86%.
View the Zacks #1 Rank List
Image: Bigstock
FedEx Gears Up for Q3 Earnings: What's in Store for the Stock?
Key Takeaways
FedEx Corporation (FDX - Free Report) is scheduled to release third-quarter 2026 results on Oct. 28, after market close.
The transportation giant exits the September-end quarter amid higher wage and purchased transportation costs, expenses related to the new pilot contract and lingering stranded costs following the FedEx Freight spin-off. Although revenue momentum and transformation-related savings are likely to have provided some support, these cost pressures may have constrained profitability.
The Zacks Consensus Estimate for the third-quarter 2026 earnings has been revised downward by 30.6% over the past 60 days to $3.24 per share. The Zacks Consensus Estimate for 2026 revenues is pegged at $92.14 billion, indicating a 2.27% increase from 2025 actuals.
FedEx Corporation Price and EPS Surprise
FedEx Corporation price-eps-surprise | FedEx Corporation Quote
Factors Likely to Have Influenced FDX’s Q3 Performance
Higher Operating Costs: Wage inflation and purchased transportation expenses are likely to have weighed on FedEx’s profitability. Management’s calendar 2026 outlook incorporates approximately $2.6 billion of higher base expenses stemming from increased wage and purchased transportation rates and other inflationary factors.
Pilot Contract Expenses: The new pilot agreement is another likely cost headwind. FedEx expects the ratification of the contract to create an approximately $200 million expense headwind in calendar 2026, with the agreement becoming effective June 29.
Stranded Costs Following Freight Spin-Off: Costs remaining after the separation of FedEx Freight may also have limited margin expansion. FedEx estimated roughly $350 million of stranded costs after transferring certain expenses to FedEx Freight and expects to eliminate about $100 million of those costs during calendar 2026.
Seasonality and Slower Domestic Growth: The September quarter is traditionally FedEx’s weakest from an absolute profitability standpoint. Management had also expected the U.S. domestic growth rate to decelerate as the company lapped strong prior-year new-business onboarding, while Ground Economy volumes were projected to decline at a low-single-digit rate.
Partly offsetting these pressures, continued Network 2.0 savings, healthy base pricing and demand for premium B2B services are likely to have provided some support. FedEx remains on track to achieve nearly $1 billion of Network 2.0-related savings by the end of calendar 2026.
What Our Model Says About FDX
Our proven model does not conclusively predict an earnings beat for FedEx this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
FedEx has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
United Parcel Service (UPS - Free Report) has an Earnings ESP of +0.95% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
UPS is scheduled to report third-quarter 2026 earnings on Oct. 28. The Zacks Consensus Estimate for third-quarter 2026 earnings has remained flat at $1.63 per share over the past 60 days. UPS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, with the average beat being 12.4%.
Kirby Corporation (KEX - Free Report) has an Earnings ESP of +1.87% and a Zacks Rank #3 at present. KEX is scheduled to report third-quarter 2026 earnings on Oct. 28.
The Zacks Consensus Estimate for third-quarter 2026 earnings has been revised upward by 0.51% to $1.96 per share over the past 60 days. KEX’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark on the other occasion. The average beat is 2.86%.