FedEx Corporation

FedEx reported Q3 adjusted EPS of $3.74, up 28% year over year. Consolidated revenue grew 12% year over year, including a 4 percentage point benefit from fuel-price-driven surcharge revenue, and adjusted operating income increased $164 million, or 16%. Express U.S. Domestic revenue rose 10% and adjusted operating income increased 7%; Express International revenue rose 17% and adjusted operating income increased 52%. Management raised CY '26 adjusted EPS guidance to $18 to $18.60, expects about 12% full-year revenue growth, and now expects approximately $4 billion of adjusted free cash flow. It also guided to Q4 adjusted EPS of $6.3 to $6.63 and said Q4 revenue growth should be about 10%, with U.S. revenue up high single digits and international up high teens.

Raj Subramaniam framed the quarter as evidence that FedEx is executing well operationally and strategically while simplifying the portfolio and returning cash to shareholders. He emphasized the company’s move toward higher-value B2B and premium B2C, the benefits of Network 2.0, European restructuring, and new commercial partnerships that leverage FedEx’s data and technology. His tone was confident and upbeat, repeatedly pointing to momentum toward the company’s 2029 commitments and stronger stockholder value creation.

Claude Russ focused on the mix shift toward higher-yielding services, cost reduction, and cash generation. He cited Q3 adjusted EPS of $3.74, adjusted operating income up $164 million, and said the company expects $3.9 billion of CapEx in CY '26, with 90% maintenance or efficiency related. He also said FedEx has $4.3 billion of remaining buyback authorization, repurchased $2 billion of stock since June, and is targeting about $4 billion of adjusted free cash flow in CY '26, while maintaining the path to $6 billion by 2029. He flagged Q4 headwinds including $130 million from higher over-the-road linehaul rates, $100 million from the pilot agreement, and $80 million of aircraft maintenance expense, but said these pressures are transitory.

Analysts pressed management on the pricing environment, Q4 headwinds, 2027 margin trajectory, and how FedEx plans to monetize its retained Freight stake. Management said the domestic pricing environment is improved versus 2025 and that most of the domestic yield improvement was base yield, while international yields benefited from fuel plus mix and stronger export flow. On margins, executives said the Q4 cost pressures are transitory and should abate in 2027, with both domestic and international margins expected to expand further. On capital allocation, management said it will monetize the FedEx Freight stake within 24 months of the spin and deploy proceeds to maximize shareholder value, while keeping leverage and buybacks under disciplined review.