Can FDX sustain its EPS growth in 2025?

**FedEx's EPS growth in 2025 is likely to be challenged.** Here's why: 1. **Analyst Consensus and Previous Cuts**: Analysts currently peg FedEx's fiscal 2025 EPS at $18.93, which represents a 6% growth. However, FedEx has already cut its profit expectation for the year, with a previous forecast range of $19 to $20 per share. The latest forecast puts the EPS range at $18.00 to $18.60, indicating a more conservative outlook. |code|Ticker|Name|Date|Diluted EPS (FY) YoY|Diluted EPS (FY)|market_code| |---|---|---|---|---|---|---| |FDX|FDX.N|Fedex|2020|141.37931034482762|4.9|169| |FDX|FDX.N|Fedex|2021|296.93877551020404|19.45|169| |FDX|FDX.N|Fedex|2022|-26.32390745501285|14.33|169| |FDX|FDX.N|Fedex|2023|8.025122121423589|15.48|169| |FDX|FDX.N|Fedex|2024|11.175710594315248|17.21|169| 2. **Impact of Inflation and Contract Expirations**: FedEx's lowered EPS outlook is due to inflationary pressures and contract expirations. These factors are expected to continue impacting the company's profitability, as evidenced by the $180 million headwind caused by the expiration of the US Postal Service contract. 3. **Operational Challenges**: Weakness in the industrial economy and pressure on higher-margin B2B volumes are also affecting FedEx's performance. Additionally, FedEx Freight experienced a 5% revenue decline due to lower volumes, fuel surcharges, and weight per shipment. 4. **Cost Management Efforts**: Despite these challenges, FedEx has implemented cost-saving measures, such as the DRIVE program, which aims to achieve $2.2 billion in savings for FY25, with a total target of $4 billion from the FY23 baseline. These efforts may help mitigate some of the negative impacts on EPS. 5. **Market Conditions**: The overall market conditions, including potential changes to the de minimis tax code, could also influence FedEx's EPS growth. The company is preparing for these potential changes, but their impact on the full year outlook is uncertain. In conclusion, while FedEx has made efforts to manage costs and sustain growth, the prevailing inflationary pressures, contract expirations, and operational challenges suggest that sustaining EPS growth at the current analyst consensus in 2025 may be difficult. The company's conservative forecast and cost management initiatives indicate a proactive approach to navigating these challenges.