This article first appeared on GuruFocus.

Revenue Growth: Full-year revenue increased by 8%, with a 13% increase in Q4.

Adjusted Operating Income: Full-year adjusted operating income grew by 8%, with a 3% increase in Q4.

Adjusted Operating Margin: Achieved a 7.7% adjusted operating margin, the highest in four years.

FEC Revenue and Income: FEC revenue grew by 14% in Q4, with a 13% increase in adjusted operating income.

Adjusted EPS: Delivered $20.24 in adjusted EPS for FY26, with $6.31 in Q4.

Free Cash Flow: Achieved $4.7 billion in adjusted free cash flow for FY26.

CapEx: FY26 CapEx was $3.8 billion, representing 4% of revenue.

Healthcare Transportation Revenue: Exited FY26 with nearly $10 billion in healthcare transportation revenue.

International Export Package Volumes: Increased by 5% year-over-year in Q4.

US Domestic Volume: Grew by 3% year-over-year in Q4.

Yield Growth: FEC package yield increased by 11% in Q4.

CY26 Revenue Outlook: Expected revenue growth of approximately 11% for CY26.

CY26 Adjusted EPS Outlook: Expected range of $16.90 to $18.10 per diluted share.

Release Date: June 23, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

FedEx Corp (NYSE:FDX) exceeded its $1 billion transformation-related savings target for FY26, demonstrating effective cost management.

The company reported a 13% increase in Q4 revenue, driven by yield and volume strength across almost all services.

FedEx Corp (NYSE:FDX) achieved a 7.7% adjusted operating margin, the highest in four years, reflecting structural improvements.

The spin-off of FedEx Freight positions both companies for success as separate focused industry leaders.

FedEx Corp (NYSE:FDX) reported strong free cash flow and adjusted earnings per share growth for seven consecutive quarters.

Negative Points

FedEx Freight’s adjusted operating income declined, impacting overall financial results.

The grounding of the MD-11 aircraft fleet posed significant operational challenges.

Higher fuel costs and variable compensation expenses offset revenue gains in Q4.

The company faces ongoing headwinds from global trade policy changes and geopolitical unrest.

FedEx Corp (NYSE:FDX) anticipates a low-single-digit volume decline within ground economy services.

Q & A Highlights

Q: Can you discuss the factors contributing to the expected acceleration in profitability for the remainder of the calendar year? A: Claude Russ, Interim CFO, explained that the variable compensation headwind seen in Q4 FY26 will dissipate, becoming only a $100 million headwind in the transition year. Additionally, the seasonality will shift, with Q4 being the strongest seasonal quarter. The ongoing base business momentum, both in revenue growth and cost management, supports the expected 19% profit growth and 20% EPS growth.

Story Continues

Q: How much margin improvement is expected for FedEx Express Corporation (FEC) in calendar year ’26, and what is the plan for stranded costs? A: Claude Russ stated that margin improvement is expected year-over-year in both the calendar year and the transition period, with more improvement in the transition year due to variable comp headwinds in the first five months. Regarding stranded costs, $250 million has already been conveyed, and $100 million more is expected to be removed in CY26, with the remaining costs mitigated by CY27.

Q: Can you clarify the impact of fuel on the quarter and how you view the fuel dynamic going forward? A: Claude Russ noted that the fuel surcharge resets weekly and effectively offsets increased expenses from higher fuel prices. The increased revenue from fuel surcharges was able to materially offset the increased fuel expenses, resulting in no material impact on profit. Brie Carere added that there has been no demand destruction due to elevated fuel prices.

Q: What is driving the momentum in the B2B segment, and how significant is the impact of AI-driven CapEx spending? A: Brie Carere highlighted that the B2B momentum is driven by profitable market share gains and a focus on core B2B verticals. The quarter saw improvement across all key verticals, with AI and data center wins contributing, especially from Asia. The growth is broad-based, with some inventory restocking also playing a role.

Q: How is FedEx managing its SMB strategy in light of competition from Amazon’s third-party logistics expansion? A: Brie Carere emphasized FedEx’s strong SMB performance, with double-digit growth and high customer loyalty. FedEx focuses on B2B and high-value B2C, offering a global network and superior visibility. The company maintains goal congruency with customers, supporting their growth while enhancing FedEx’s profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.