FedEx

The continuing company (without Freight) had an operating margin of only 5.5% in calendar 2025 (revenue $82.5bn, operating profit $4.55bn). The high-margin LTL business is gone, and the Federal Express segment's adjusted margin fell in Q4 to 7.7% from 8.4% a year earlier, because wages, purchased transport and fuel rose faster than revenue.

ROIC 9.2% vs a WACC of 7.9%; flat at 8.3–9.5% in FY2022–26. A capital-heavy network that earns only slightly more than its cost of capital, and the figure still includes the more profitable Freight.

Revenue rose 7.7% in FY2026, but driven by prices and fuel surcharges; the CEO himself said the margin would only have risen without the fuel surcharge. Analysts expect revenue −0.3% and EPS +3.1% next year and only 1.75% annual revenue growth over three years. Revenue was flat from FY2022 ($93.5bn) to FY2025 ($87.9bn).

The forward P/E on the continuing company is about 16.5 (price $289.65 vs guidance of $16.90–18.10) and about 19.5 on 2025 EPS ($14.83), vs a forward P/E of 10.0–13.1 in FY2022–26 for the whole group including Freight. GuruFocus: P/E 21% above the 5-year median of 12.4. EV/EBITDA of 8.3 is mid-range of 7.6–11.2 and P/FCF 13.4 below 17.5–20.5, but both are calculated on cash flow incl. Freight and lifted by record-low investment. You pay a higher multiple than historically for a lower-margin business.

Amazon's and retailers' own delivery networks are taking market share from FedEx and UPS (ShipMatrix). Morgan Stanley cut its target to $160 from 230, citing Amazon's expansion into third-party shipping, and reiterated Sell on 18/9.

2026 guidance of $16.90–18.10 in adjusted EPS was clearly below consensus of about $19.9, and the stock fell about 6–7% after the report on 23/6. Management has warned of about $600m of stranded overhead after the spin-off and a headwind of about $200m from a new pilot contract.

CFO John Dietrich has left, and Claude Russ is interim CFO and chief accounting officer in the middle of the spin-off and the change of fiscal year. The company enters its first report as a pure parcel company without a permanent CFO.

Net debt $29.4bn (net debt/EBITDA 2.5 including Freight EBITDA, which is now gone); total debt $42.9bn and Altman Z 2.56. Pension contributions of $475m are budgeted for 2026.

Insiders have sold about $18.1m over 12 months with no purchases. In April–June 2026 Chief People Officer Tracy Brightman sold $6.2m and directors Susan Schwab and Paul Walsh $2.1m and 1.6m.

Tariffs and the EU's removal of the €150 de minimis threshold from 1/7/2026 create friction in international e-commerce, and US 10-year yields above 5% with rising recession fears hit a cyclical freight company with a beta of 1.36. The stock fell 4.1% to $279.54 on 24/9.

The transformation programme delivered over $1bn of savings in FY2026; investment fell to 4.0% of revenue, the lowest in FedEx's history, and FCF rose to a record $5.1bn (from 3.0bn).

Buybacks ($0.8bn) and dividends ($1.37bn) totalled $2.2bn in FY2026, clearly below FCF of $5.1bn; the share count fell 1.65%. In FY2025, though, payouts exceeded FCF ($4.4bn vs 3.0bn).