FedEx Delivers Surprise Growth, Plans Freight Spin-Off by 2026

FedEx (FDX) kicked off its fiscal 2026 with stronger-than-expected earnings and revenue, marking its best revenue growth since the pandemic. The company also reaffirmed full-year guidance and announced plans to spin off its Freight division by June 2026.

Key Points

1. Strong Q1 performance: Revenue rose 3.1% year over year to $22.2 billion, with adjusted EPS of $3.83 topping expectations.
2. Domestic demand leads growth: U.S. package volumes climbed 5%, offsetting a 3% decline in international shipments.
3. Freight spin-off ahead: FedEx aims to separate its Freight business into a standalone public company by mid-2026.

A Solid Quarter

FedEx’s revenue grew 3.1% compared to last year—the best growth since the pandemic. Wall Street was expecting $21.7 billion in sales, but FedEx delivered $22.2 billion. Earnings also beat forecasts, landing at $3.83 per share versus the $3.63 expected.

The company is projecting full-year earnings between $17.20 and $19 per share and revenue growth of 4% to 6%. That’s much stronger than the 1% growth analysts had been predicting.  

Despite the positive print, FedEx stock remains down nearly 24% over the past year, reflecting lingering concerns about global trade and slowing shipping volumes.

U.S. Demand Strong, Global Trade Still a Drag

The star of the quarter was FedEx’s U.S. package business. Domestic volumes rose 5%, with more packages going to homes and businesses. Revenue per package also improved. The healthcare delivery segment showed strong growth too.

International shipping was a different story. Shipments from China slowed after the U.S. ended duty-free treatment on small, low-value packages. Overall, international volumes dropped 3%, though demand from Southeast Asia and Europe helped cushion the decline.

FedEx’s Freight unit, which handles heavy shipments, saw revenue slip 3% due to weak industrial demand. That division is set to be spun off into its own publicly traded company by June 2026, which management believes will unlock new growth opportunities.  

Analysts Weigh In: Relief, But Questions Remain

Wall Street called the results “better than feared.” Strong U.S. demand and cost savings showed that FedEx is finding ways to stay profitable even with global trade challenges.

Still, analysts remain cautious. Trade policies, weaker business spending, and the impact of tariffs are all concerns. Price targets for the stock now range between $240 and $285, with an average around $263. About 59% of analysts currently rate FedEx a Buy.

Looking ahead, FedEx will be tested by the upcoming holiday season, where it expects modest year-over-year volume growth. The company is also pushing forward with cost-cutting, digital transformation, and onboarding new large customers such as Amazon (AMZN) and Best Buy (BBY).

Conclusion
FedEx’s strong start to fiscal 2026 suggests its turnaround efforts are gaining traction. While international trade headwinds and tariff changes present challenges, robust domestic demand, operational efficiencies, and the planned Freight spin-off provide reasons for cautious optimism. Investors will be watching closely to see if the company can maintain momentum into the critical holiday season.

Considering a $1,000 investment in these companies? 

Our team at Stock Investor carefully curated a list of top stocks with the potential for significant returns, suitable for beginners and seasoned investors alike who are eager to learn a trade and unearth the best stocks to buy. Though not featured in this article, these selected stocks could be game-changers in the future.

For those seeking dynamic trading experiences, consider joining our Swing Trade Alerts, Option Income Alert, or our Trading Room. Take advantage of our special offer today, starting at just $1 in the first month.

Unlock the secrets of Smart Money

Explore how billionaires and institutions are influencing the market. Follow their every move with DarkOption Flow and stay updated on essential market insights. Begin your journey to informed investing today!

Education

And if you're a fan of Invest opedia, you'll appreciate what we offer at SharperTrades even more. Explore our comprehensive option trading course and technical trading course, where you can learn trading, analyze stocks, delve into chart patterns for stocks, and gain invaluable insights for making the best company investments.

Unlock Your Stock Market Edge with SharperTrades. Dive into powerful trading tools, learn a trade, and receive expert guidance. Stay up-to-date with regular market updates. Learn trading, basics of investing, and how to pick the best stocks to buy. Whether you're a beginner or seasoned investor and trader, we've got you covered. Get started for free, today!

This article was created with AI assistance and reviewed by an editor. For details, please refer to our Terms of Use.

Trading Risk Disclaimer

​All the information shared is provided for educational purposes only. Any trades placed upon the reliance of SharperTrades, LLC, and/or DarkOption Flow are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward in trading stocks, cryptos, commodities, options, forex, and other trading securities, there is also a substantial risk of loss. All trading operations involve a high risk of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can never be guaranteed. SharperTrades, LLC and DarkOption Flow are not registered as investment advisers with any federal or state regulatory agency. This is not an offer to buy or sell stocks, cryptos, forex, futures, options, commodity interests, or any other trading securities. SharperTrades, LLC and DarkOption Flow are not brokers and do not accept deposits. Purchases should not be considered deposits. The technical solution offered by the DarkOption Flow platforms is provided by a third party.