FedEx 2026 Q2 Earnings Strong Performance with 6.8% Revenue Growth and 33% EPS Surge

FedEx (FDX) reported fiscal 2026 Q2 earnings on Dec 18, 2025, surpassing expectations with a 6.8% revenue increase to $23.47 billion and a 33% rise in EPS to $4.07. The company raised its full-year guidance, reflecting confidence in sustained profitability and operational resilience. Shares gained 1.4% in the latest trading day, with an 8.46% monthly surge, while the spin-off of FedEx Freight remains on track for June 2026.

Revenue

FedEx’s total revenue grew by 6.8% to $23.47 billion in 2026 Q2, driven by robust performance across its core segments. The Federal Express segment led the charge with $20.43 billion in revenue, reflecting strong U.S. domestic and international package demand. FedEx Freight contributed $2.14 billion, while corporate and other operations added $897 million. The expansion in package yields and volume, coupled with cost savings from transformation initiatives, underscored the company’s ability to capitalize on pricing discipline and operational efficiency.

Earnings/Net Income

FedEx’s EPS surged 33% to $4.07 in 2026 Q2, up from $3.06 in 2025 Q2, while net income reached $956 million, a 29% increase from $741 million. The company has maintained profitability for over 20 years in this quarter, highlighting its operational resilience. The earnings performance aligns with strategic cost reductions and margin expansion, reinforcing investor confidence in long-term value creation.

Post-Earnings Price Action Review

The strategy of buying FedEx shares after a quarterly revenue increase and holding for 30 days delivered moderate returns but underperformed the market. With a CAGR of 17.59% versus a benchmark lag of 18.96%, the approach indicated low risk (0.00% maximum drawdown) and a Sharpe ratio of 0.56.

The stock’s post-earnings rally, including an 8.46% month-to-date gain, suggests market optimism about the company’s revised guidance and spin-off plans. However, the underperformance relative to the market highlights the need for sustained operational execution to justify the valuation premium.

CEO Commentary

CEO Raj Subramaniam emphasized FedEx’s resilience amid challenges like the MD-11 grounding and global trade shifts, achieving high single-digit revenue growth and margin expansion. Strategic priorities include the June 2026 spin-off of FedEx Freight and AI adoption to enhance operational efficiency. The CEO underscored ongoing network transformation, including Network 2.0 and cost reductions, while expressing optimism about unlocking value through the Freight spin-off and digital initiatives. Leadership remains focused on resilience, safety, and data-driven strategies to maintain profitability and market positioning.

Guidance

FedEx raised its FY26 adjusted EPS outlook to $17.80-$19, up from $17.20-$19, citing strong Q2 performance. The company expects 5%-6% consolidated revenue growth, with FEC revenue up 7% and FedEx Freight revenue flat to slightly down. CapEx remains targeted at $4.5 billion for FY26. Challenges include $25 million in Q2 MD-11 grounding costs and $600 million headwinds in H2 from variable compensation. Q3 adjusted EPS is expected to decline from Q2, with Q4 as the strongest quarter.

Additional News

FedEx’s planned spin-off of FedEx Freight into a publicly traded entity (FDXF) remains on track for June 1, 2026, with an Investor Day scheduled for April 2026. The company completed $276 million in share repurchases during Q2, reducing outstanding shares and boosting EPS by $0.05. Additionally, FedEx announced $1 billion in permanent cost reductions through Network 2.0 and structural savings by FY2026, reinforcing its commitment to operational efficiency.

Key Non-Earnings Updates

1. Spin-Off Progress: FedEx Freight’s separation is advancing, with a tax-efficient structure for stockholders and preparations for a NYSE listing under the ticker FDXF.

2. Capital Allocation: Share repurchases under the 2024 authorization reduced shares outstanding, enhancing EPS growth.

3. Network 2.0: The $1 billion in cost reductions includes advancements in automation and fleet modernization, positioning FedEx for long-term margin expansion.

FedEx’s strategic moves, including the Freight spin-off and cost-cutting initiatives, signal a pivot toward leaner operations and shareholder value creation. The company’s ability to navigate macroeconomic headwinds while maintaining profitability underscores its competitive positioning in the logistics sector.