FedEx Exceeds Q1 Earnings and Revenue Estimates, Posts 6.4% YoY Growth in Earnings

FedEx Corporation reported Q1 FY26 earnings of $3.83 per share, beating the Zacks Consensus Estimate of $3.65 and improving 6.4% YoY. Revenues of $22.2 billion surpassed the Zacks Consensus Estimate of $21.7 billion and increased 3% from the year-ago quarter. Operating income rose 10% to $1.19 billion, and operating margin expanded to 5.3% from 5.0% in the year-ago quarter.

FedEx Corporation (FDX) reported solid first-quarter fiscal 2026 (FY26) results, with earnings and revenues exceeding the Zacks Consensus Estimate. Quarterly earnings (excluding 37 cents from non-recurring items) of $3.83 per share beat the Zacks Consensus Estimate of $3.65 and improved 6.4% year over year (YoY). Share repurchases boosted fiscal first-quarter earnings by 2 cents per share.

Revenues of $22.2 billion surpassed the Zacks Consensus Estimate of $21.7 billion and increased 3% from the year-ago fiscal quarter. Operating income, on a reported basis, rose 10% to $1.19 billion from the year-ago fiscal quarter’s reported number. Operating margin expanded to 5.3% from 5.0% in the year-ago reported quarter. These improvements were driven by strength in U.S. domestic package revenues and continued structural cost reduction. However, results were negatively impacted by a non-recurring income tax expense of $16 million (7 cents per share).

Operating expenses (reported basis) increased by 3% to $21.1 billion. The company exited the first quarter with cash and cash equivalents of $6.16 billion compared to $5.50 billion at the end of the prior quarter. Long-term debt (less current portion) was $20.2 billion compared to $19.1 billion at the end of the prior quarter.

FedEx completed $500 million in share repurchases during the reported quarter. The planned spin-off of FedEx Freight into a new publicly traded company is on track and is anticipated to be achieved in a tax-efficient manner for FDX shareholders and executed by June 2026.

For the full year FY26, FedEx expects revenue growth in the range of 4-6% on a year-over-year basis. The effective tax rate (ETR) is estimated at around 25%. Pension contributions are now expected to be up to $400 million compared to the prior view of $600 million. Diluted earnings per share (EPS) are anticipated between $14.20 and $16.00 before the MTM retirement plans accounting adjustments, and after excluding costs related to business optimization initiatives, the planned spin-off of FedEx Freight, and the planned change in the company's fiscal year end, EPS is expected between $17.20 and $19.00.

FedEx anticipates permanent cost reductions of $1 billion in transformation-related savings from structural cost reductions and the advancement of Network 2.0. Capital spending for the full year FY26 is expected to be $4.5 billion, prioritizing investments in network optimization and efficiency improvement, which includes fleet and facility modernization and automation.

FedEx Corporation currently carries a Zacks Rank #3 (Hold) FedEx Surpasses Q1 Earnings & Revenue Estimates, Improves Y/Y^[1].