FedEx beat Wall Street’s Q4 estimates, but its stock still fell 6% to 7% after hours. The drop came in its first quarter since spinning off FedEx Freight on June 1. The selloff reflected margin pressure rather than a guidance miss.
The numbers: FedEx reported Q4 revenue of $25.0 billion, up about 13% year over year, and adjusted EPS of $6.31. But adjusted operating margin slipped to 8.4% from 9.1% a year earlier. A new pilot contract takes effect June 29.
Reading the guidance: FedEx is changing its fiscal year end from May 31 to December 31. Its new adjusted EPS guidance of $16.90 to $18.10 covers only a seven-month transition period June through December 2026 and applies to continuing operations.
Against a comparable $15 figure for the same months of 2025, that works out to roughly 17% growth.
The cost programs: FedEx’s cost cuts are running ahead of plan.
DRIVE exceeded its $1 billion savings target for FY2026, on top of the $4 billion cumulative it achieved through FY2025
Network 2.0 cuts pickup-and-delivery costs about 10% where fully deployed, and targets a combined $2 billion savings goal with DRIVE by the end of CY2027
Capital spending fell to $3.8 billion, or 4.0% of revenue, the lowest in company history
Full-year revenue was $94.7 billion and adjusted EPS was $20.24, up 11%.
What's next: FedEx Freight now trades as an independent LTL carrier. It paid a roughly $4.1 billion cash dividend to the parent before the June 1 split, and FedEx kept a 19.9% stake.
Any bundled parcel and LTL discount that previously sat under one FedEx Corp contract ended with the separation. Shippers now contract with FedEx Freight on its own.
