What’s Next For FedEx Stock?

FedEx (NYSE: FDX) shares declined 6% in after-hours trading on Tuesday, June 24, following the release of its Q4 FY2025 earnings report (fiscal year ending in May). Although the company exceeded consensus expectations, a cautious outlook for the upcoming quarter spooked investors. This drop compounds what has already been a difficult year for FedEx, with its stock down 17% year-to-date and 27% below its 52-week high of $314. By comparison, peer UPS (NYSE: UPS) is down 19% this year and 32% from its 52-week peak of $148. This article examines FedEx’s latest results and its current valuation. If you’re seeking upside potential with less volatility than individual stocks, explore the High Quality portfolio, which has outperformed the S&P and delivered over 91% returns since inception. Also, check out – Nektar Therapeutics Is Up 150%: What’s Happening With NKTR Stock?

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FedEx’s Q4 Performance

FedEx’s revenue for Q4 came in at $22.2 billion, matching the prior-year quarter and beating the $21.8 billion consensus. The package segment showed positive signs, with a 5% increase in volume and a marginal 0.4% dip in composite package yield. However, freight volume dropped by 15%, partly offset by a 3% increase in composite freight yield. The freight decline was partly due to reduced fuel surcharge revenue.

Importantly, FedEx is in the process of spinning off its freight business— a strategic decision aimed at sharpening the company’s focus on its core parcel delivery services while giving the freight unit operational independence.

Margin Improvement and Earnings Growth

Despite flat revenue, FedEx posted a notable 600 basis point jump in its adjusted operating margin to 9.1%. The company also demonstrated a strong shareholder return strategy, spending $4 billion on share repurchases in fiscal 2024, reducing its outstanding shares by 3%. This combination of margin gains and a smaller share base led to adjusted earnings of $6.07 per share, up from $5.41 a year ago and exceeding the $5.86 consensus.

Soft Guidance Tanks FedEx Stock

Despite a robust Q4, FedEx stock declined due to weak guidance for Q1 FY2026. The company anticipates revenue to remain flat or grow up to 2% year-over-year—slightly better than analyst expectations of a 0.1% drop. However, its projected adjusted EPS range of $3.40 to $4.00 falls short of the $4.06 consensus. While the company hasn’t issued full-year guidance, it did announce an additional $1 billion in cost savings for FY2026, adding to the $4 billion already realized.

Is FedEx Stock Undervalued?

With the stock currently trading around $215, FedEx has a trailing adjusted P/E ratio of 12x based on its $18.19 earnings per share. This is well below its five-year average of 16x, suggesting potential for price appreciation if valuation multiples revert. Also, see – FedEx’s Valuation Ratios Comparison.

Several factors could support an upward revaluation. FedEx is witnessing volume recovery following a post-pandemic slump and is improving its margins. Moreover, the freight spin-off could unlock shareholder value by allowing FedEx to sharpen its focus. While Trefis is updating its model to incorporate the latest results, early signs suggest FDX stock may be slightly undervalued, representing an opportunity for long-term investors.

That said, risks remain. The weaker Q1 forecast and broader uncertainties—including geopolitical tensions and rising oil prices stemming from conflict involving Iran, which increases FedEx’s costs—may deter investors from bidding up the stock. See – Oil Price To $150?

Nonetheless, with the current valuation roughly 30% below historical norms, many of these risks appear to be priced in. Trefis applies a risk framework when constructing its High Quality (HQ) Portfolio, which includes 30 stocks and has consistently outperformed the S&P 500 over the past four years. What’s the reason? These stocks have historically delivered stronger returns with lower volatility—less of a roller-coaster ride—demonstrated in the HQ Portfolio performance metrics.

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