Revenue rises to $22.2bn for FedEx in Q1 FY2026, earnings improve on cost reductions and U.S. package growth

ByInvestment Club

Overview

FedEx reported stronger first quarter fiscal 2026 results, with revenue up 3% YoY and adjusted EPS up to $3.83. The company benefited from higher U.S. domestic package volumes and yields, cost savings from transformation initiatives, and structural efficiencies. While FedEx Freight revenue declined, the planned spin-off of the segment remains on track for June 2026. Shareholder returns continued with $500m in buybacks during the quarter.

“Our earnings growth underscores the success of our strategic initiatives, as we are flexing our network and reducing our cost-to-serve, while further enhancing our value proposition and customer experience. Our strategic initiatives, paired with our unique operational data platform from moving 17 million packages through our network daily, position us well to serve our customers in any environment and to create longterm value for our stockholders”, said Raj Subramaniam, FedEx Corp. president and chief executive officer.

Q1 FY2026 vs. Q1 FY2025:

  • Revenue was $22.2bn (+3% YoY), reflecting stronger U.S. domestic package growth and improved yields.
    • FedEx Express segment revenue grew to $19.1bn (+4% YoY), supported by higher U.S. domestic and international priority yields and volume, with operating income up to $1.14bn (+19% YoY).
    • FedEx Freight segment revenue declined to $2.26bn (-3% YoY), with operating income down to $360m (-18% YoY) due to lower volumes and higher wage rates.
  • GAAP operating income rose to $1.19bn (+10% YoY), while adjusted operating income grew to $1.30bn (+7% YoY), reflecting transformation-related cost savings.
  • Operating margin improved to 5.3% GAAP (5.8% adjusted) from 5.0% GAAP (5.6% adjusted) last year.
  • Operating expenses increased to $21.1bn (+3% YoY), reflecting higher labor and purchased transportation costs, partly offset by lower fuel expenses.
  • GAAP net income increased to $824m (+4% YoY), while adjusted net income rose to $912m (+2% YoY).
  • GAAP diluted EPS was $3.46 (+8% YoY), and adjusted EPS was $3.83 (+6% YoY).
  • Cash provided by operations was $1.7bn (vs. $1.2bn last year), while capital expenditures fell to $623m (-19% YoY).
  • FedEx repurchased $500m of shares in Q1 FY2026, reducing outstanding shares by 2.2m and contributing $0.02 to EPS.
  • Cash on hand rose to $6.2bn as of August 31, 2025.

For FY2026, FedEx projects revenue growth of 4%-6% and adjusted diluted EPS of $17.20-$19.00, excluding MTM retirement plan accounting impacts. Guidance assumes permanent cost reductions of $1bn from transformation initiatives (Network 2.0), capital spending of $4.5bn with focus on network optimization and fleet modernization, and an effective tax rate of ~25%. The company confirmed that the spin-off of FedEx Freight remains on track for completion by June 2026, creating a separately traded entity listed as FDXF.

FedEx shares ended the week up +2.3% after the company reported quarterly results that managed to surpass Wall Street expectations, despite mounting pressure from rising tariffs. Technically, the stock has reclaimed the 50-day SMA ($228.95), which now acts as a near-term support level, while the 200-day SMA ($240.60) remains a key resistance overhead. The RSI sits at 55.41, a neutral reading that does not yet signal a clear short- to medium-term trend. From a broader perspective, however, the stock remains down -15.5% year-to-date, reflecting ongoing investor caution even as short-term sentiment shows signs of stabilization.

Source: TradingView

Author: Ionuț-Adrian Lazar

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