VALUATION HIGHLIGHTS

1. FedEx Ground constitutes 71% of the Trefis price estimate for FedEx's stock.
2. FedEx Express constitute 28% of the Trefis price estimate for FedEx's stock.

WHAT HAS CHANGED?

Latest Earnings: Q3 Fiscal Year 2026

FedEx delivered a massive earnings beat for Q3 FY'26, reporting adjusted EPS of $5.25, which represents a 16% year-over-year increase and crushed consensus estimates of $4.11. Revenue rose 8% to $24.0 billion, driven by strong yield and volume growth across nearly all package services. The Federal Express segment (integrated Express and Ground) saw a 10% revenue increase to $21.2 billion, powered by a record December peak season and significant share gains in high-margin B2B verticals like healthcare and aerospace.

Note: FedEx's FY'25 ended on May 31, 2025. Q3 FY'26 ended on February 28, 2026.

FedEx Freight Spin-Off and Structural Transformation

Management confirmed that the planned spin-off of FedEx Freight into an independent, publicly traded company (ticker: FDXF) remains on track for June 1, 2026. This move is a central pillar of the "One FedEx" strategy to unlock shareholder value. Additionally, FedEx is transitioning its fiscal year-end to December 31, effective June 1, 2026, to better align with the calendar year and industry standards. The company also announced a conditional agreement to take the European locker giant InPost private, a move expected to be accretive to earnings within the first year.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of FedEx's value that present opportunities for upside or downside to the current Trefis price estimate:

Federal Express (Integrated Network)

• Network 2.0 Execution: FedEx has successfully moved approximately 35% of eligible volume through its 400 optimized Network 2.0 facilities. Trefis estimates suggest that reaching the 65% optimization target by the next peak season could drive an additional $2.0 billion in cumulative savings by 2027. Upside exists if the integration of Express and Ground assets continues to yield higher-than-expected margin expansion.


• B2B Revenue Quality: Nearly half of the recent revenue growth was driven by high-margin B2B services. If FedEx maintains its current momentum in specialized sectors like automotive and data centers, it could offset the ongoing softness in the broader less-than-truckload (LTL) market.

For additional details, select a division from the interactive Trefis split for FedEx at the top of the page.

BUSINESS SUMMARY

FedEx is a global logistics powerhouse currently undergoing its most significant structural shift in decades by merging its Express and Ground units into a single, data-centric network. The company provides a comprehensive suite of transportation, e-commerce, and business services, leveraging an unmatched global air-and-ground infrastructure to power the global economy.

SOURCES OF VALUE

The newly unified Federal Express segment is the primary engine of value, combining high-speed global air capabilities with a densified, efficient ground network.

One FedEx Integration

By collapsing the silos between Express and Ground, FedEx has eliminated "dead miles" and redundant asset overhead. This integration allows the company to operate a more flexible, capital-light model that is increasingly resilient to fluctuations in global trade volumes.

Premium B2B Vertical Dominance

FedEx's strategic focus on high-value verticals, such as healthcare and tech, provides a stable, high-yield revenue stream. These specialized services benefit from the company's extensive global footprint and technical capabilities, creating a moat that is difficult for regional carriers to penetrate.

KEY TRENDS

Logistics Decarbonization and Efficiency

FedEx is aggressively modernizing its fleet, including the grounding of older MD-11 aircraft and reducing jet fuel usage. This focus on "densifying" the network through digital solutions not only supports the company's 2040 carbon-neutral goal but also serves as a critical driver for permanent structural cost reductions.

Asset Monetization via Freight Separation

The upcoming June 2026 spin-off of the Freight segment represents a major strategic shift toward a more focused corporate structure. By separating the high-margin LTL business, FedEx aims to provide investors with a cleaner valuation for its core integrated network while allowing the Freight entity to pursue its own growth strategy independently.