To The Moon

$FedEx(FDX)$ is scheduled to release its fiscal Q4 2025 earnings after the market closes on Tuesday, 24 June 2025.

Earnings Per Share (EPS): Analysts generally forecast an adjusted EPS in the range of $5.86 to $6.03 per share. This would represent a year-over-year increase from the $5.41 reported in Q4 FY2024. The Zacks Consensus Estimate is around $5.94.

Revenue: Consensus estimates for revenue are approximately $21.7 billion to $21.84 billion. This indicates a slight year-over-year decline (around 1-1.9%) from the $22.1 billion in Q4 FY2024.

FedEx (FDX) Last Neutral Earnings Call Saw Share Price Declined By 8.19%

FedEx (FDX) had a neutral earnings call on 20 March 2025 which saw its share price declined by 8.19% since.

FedEx demonstrated strong revenue growth and cost savings in Q3, along with notable achievements in its European and healthcare segments. However, challenges such as the expiration of the US Postal Service contract, weak industrial economy, and inflationary pressures have impacted the company's outlook, leading to a lowered EPS forecast.

FedEx (FDX) Guidance

During FedEx's third-quarter fiscal 2025 earnings call, the company provided guidance highlighting a 2% increase in revenue and a 12% growth in adjusted operating income year-over-year, despite significant challenges such as the expiration of the United States Postal Service contract and severe weather events. The company achieved $600 million in DRIVE savings for the quarter, contributing to its goal of a $2.2 billion annualized run rate by fiscal year-end. FedEx also discussed the impact of a weak industrial economy, particularly on its higher-margin B2B volumes, while emphasizing its readiness to capture incremental flow-through upon economic recovery.

The guidance included a revised adjusted EPS outlook for FY '25, lowered to $18 to $18.60 due to uncertain demand and higher inflationary pressures. FedEx's strategic focus remains on transforming its network, including Network 2.0 and Tricolor initiatives, which are expected to enhance efficiency and support new market growth opportunities. The company's capital allocation strategy includes a $4.9 billion CapEx plan for FY '25, with significant investments in fleet modernization and a commitment to returning $3.8 billion to shareholders through dividends and share repurchases.

Key Factors and Trends to Watch

FedEx achieved a 2% year-over-year revenue growth for the first time this fiscal year, driven by increased volume at Federal Express.

"DRIVE" Transformation Program

FedEx's "DRIVE" efficiency program has been a major focus for cost savings. The company previously stated it expects to achieve $2.2 billion in permanent cost reductions from this program in fiscal 2025. Investors will be looking for confirmation of these savings and any further updates on their impact on profitability. The company achieved $600 million in DRIVE savings in Q3 and expects to reach a total of $2.2 billion in savings for FY ‘25.

For fiscal 2026, the company expects a significantly reduced contribution from DRIVE savings (around $400 million), so the Q4 report might offer further insights into this transition.

FedEx acquired RouteSmart Technologies to enhance its route optimization capabilities, supporting Network 2.0 and global network transformation.

Segment Performance

FedEx Express: This segment has faced challenges due to weak demand and low shipping volumes, particularly in international markets. Analysts project a decline in revenue for Express (around 3.2%). Any signs of stabilization or improvement here would be positive.

The expiration of the contract resulted in a $180 million headwind to adjusted operating income in Q3. Continued weakness in the industrial economy pressured higher-margin B2B volumes, impacting FedEx Freight with a 5% revenue decline.

FedEx Ground & Freight: These segments have generally been more resilient. Investors will watch for their continued performance and how they offset potential weaknesses in Express. The company is also preparing for a spin-off of its FedEx Freight business, and any updates on this process will be significant.

Adjusted operating income grew by 12% year-over-year, with a 17% increase at Federal Express despite headwinds from the expiration of the United States Postal Service contract.

FedEx is onboarding nearly $400 million in new annualized healthcare revenue and expects to exit FY ‘25 with approximately $9 billion in healthcare revenue.

Macroeconomic Environment

FedEx's performance is highly sensitive to the global and U.S. industrial economy. Continued weakness and uncertainty in the U.S. industrial economy have been cited by FedEx as factors constraining demand for its business-to-business services. FedEx Europe achieved its best service levels in years, contributing to $600 million in DRIVE savings by the end of the fiscal year.

Geopolitical tensions and tariff-related volume headwinds could also impact international cargo movement and pricing pressure. Higher-than-expected inflationary pressures on the cost base contributed to a reduced FY ‘25 adjusted EPS outlook.

Fiscal 2025 and 2026 Guidance

FedEx previously revised its fiscal 2025 revenue outlook to be flat to slightly down year-over-year, and adjusted EPS to be in the range of $18.00 to $18.60. The Q4 report will be the final look at these numbers. FedEx lowered its FY ‘25 adjusted EPS outlook from $19-20 to $18-18.60 due to uncertain demand and higher inflationary pressures.

Perhaps more importantly, investors will be keenly focused on the fiscal 2026 outlook. Analysts like UBS have already revised down their FY2026 EPS estimates, citing a muted macroeconomic backdrop and reduced cost-saving contributions.

Shareholder Returns

FedEx recently increased its quarterly dividend by 5% for fiscal 2026. This, along with share repurchases, indicates a commitment to returning capital to shareholders. Updates on buyback programs will be monitored.

Potential Market Reaction

FedEx's stock has shown mixed reactions to earnings announcements historically. While there have been instances of positive one-day returns, it has also seen negative movements, particularly when the company misses estimates or provides a cautious outlook.

The stock has underperformed the broader market and industrial sector over the past year. A strong beat on earnings or an unexpectedly optimistic outlook for FY 2026 could provide a much-needed boost, while a miss or further downward revision to guidance could lead to further pressure on the stock.

FedEx (FDX) Price Target

Based on 27 analysts from Tiger Brokers offering 12 month price targets for FedEx in the last 3 months. The average price target is $272.89 with a high forecast of $354.00 and a low forecast of $200.00. The average price target represents a 20.73% change from the last price of $226.04.

Technical Analysis - Exponential Moving Average (EMA)

We can see that FDX is trading near the 26-EMA and 50-EMA level as it grapples with uncertain demand, especially with the most recent geopolitical tensions in the middle east, these factors could drive FDX to further lower its guidance, this could continue to see FDX having negative momentum continual.

We can see that the bulls are trying to push above the key levels while the bears are still holding back with FDX share price continue to trade sideways.

I am expecting FDX share price to give a volatility after its earnings especially if there is a further lowering of the FY 2025 guidance.

Summary

When FedEx releases its Q4 2025 earnings, the focus will be on whether they meet or exceed analyst expectations, the performance of key segments (especially Express), the impact of cost-cutting initiatives, and crucially, the outlook provided for fiscal 2026 given the challenging macroeconomic environment.

Appreciate if you could share your thoughts in the comment section whether you think FDX would lower its guidance in the earnings call for FY 2025 and 2026.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.