FedEx (FDX) Stock: Shipping Giant Posts Strong Q2 Beat on Cost Cuts and B2B Growth

TLDR

• FedEx posted Q2 earnings of $4.82 per share, crushing analyst estimates of $4.11, while revenue hit $23.5 billion
• The Express unit’s operating margin jumped to 7.7%, beating expectations by 130 basis points on pricing strength and cost cuts
• Business-to-business operations now drive 66% of revenue, with growth in healthcare, aerospace, defense, and data centers
• FedEx raised full-year earnings guidance to $17.80-$19.00 per share and revenue growth forecast to 5-6%
• FedEx Freight spin-off scheduled for June 1, 2026, under ticker FDXF on NYSE

FedEx crushed earnings expectations in its fiscal second quarter, reporting $4.82 per share compared to analyst forecasts of $4.11. Revenue climbed to $23.5 billion, topping consensus estimates of $22.78 billion.

Despite the strong results, shares fell 1.4% in premarket trading Friday. Analysts noted that investors wanted a bigger increase in full-year guidance relative to the quarterly beat.

FedEx Corporation, FDX

Business-to-business transactions now account for 66% of total revenue. FedEx is winning in healthcare, aerospace, defense, and the emerging data center market.

The artificial intelligence boom is creating fresh demand for FedEx services. Companies spending billions on AI infrastructure need to move equipment domestically and across borders.

Express Unit Drives Margin Expansion

FedEx Express delivered standout performance with operating margin reaching 7.7%. This beat consensus estimates of 6.4%.

Better pricing, ongoing cost reductions, and higher U.S. domestic volumes powered the results. Package yields improved in both domestic and International Priority segments.

The company’s focus on structural cost cuts is paying off. FedEx reaffirmed $1 billion in permanent cost reductions.

Wage increases and transportation costs created some headwinds. Global trade policy changes and MD11 aircraft fleet grounding also impacted results.

Trade Routes Shift as China Volumes Decline

U.S.-China trade has slowed over the past six months. FedEx reduced capacity on those routes in response.

However, new opportunities are emerging elsewhere. China’s overall trade surplus is growing, creating traffic to other regions.

Intra-Asia routes are seeing increased volume. Asia to Europe business-to-business traffic is up.

Latin America inbound shipments are rising. Asia to Middle East, Asia to India, and India outbound routes all posted gains.

Updated Guidance and Freight Separation

FedEx raised its full-year revenue growth outlook to 5-6% from 4-6% previously. Adjusted earnings guidance increased to $17.80-$19.00 per share, excluding pension adjustments and special items.

The company lowered its pension contribution forecast to $275 million from up to $400 million. Capital spending remains at $4.5 billion.

FedEx Freight results declined as shipments fell and wage costs increased. The freight unit recorded $152 million in spin-off related expenses during the quarter.

The separation remains on track for June 1, 2026. FedEx Freight will trade on the New York Stock Exchange under ticker FDXF.

Jefferies analyst Stephanie Moore called the quarter results a positive surprise. Express unit profit jumped nearly 50% year-over-year on high single-digit revenue growth.

The post FedEx (FDX) Stock: Shipping Giant Posts Strong Q2 Beat on Cost Cuts and B2B Growth appeared first on Blockonomi.