By Al Root

No, FedEx stock wasn't down 20% on Monday.

Instead, FedEx's spinoff -- FedEx Freight trades under the symbol FDXF -- is complete. Traders might need a few minutes to adjust.

FedEx was at $333 in late-morning trading, down about 1% from its Friday close north of $411. FedEx Freight shares were trading for $164, up about 2.5% from its late Friday price of about $160.

FedEx investors received one share of FedEx Freight for every two shares of FedEx held. Shares of companies about to be spun off often trade on a when-issued basis to help investors with price discovery.

The difference is the freight spin.

Freight is a less-than-truckload $(LTL)$ business that serves mainly industrial customers who don't need an entire truck to ship goods over relatively short distances, compared with the semi-trucks that drive across the country. Old Dominion Freight Line and XPO are LTL shippers.

The reason for FedEx's separation of its LTL business is obvious. Old Dominion and XPO trade for close to 40 times earnings expected over the coming 12 months. FedEx stock trades for about 18 times.

FedEx Freight expects fiscal 2026 sales of $8.7 billion and operating profit of $1.1 billion. For FedEx as a whole, before the spin, including Freight, Wall Street projected almost $94 billion in sales and $6.5 billion in operating income.

If FedEx Freight was to trade like Old Dominion, the stock could be worth $275 a share. Old Dominion, however, is more profitable. It's expected to generate a 2026 operating profit of $1.5 billion from $5.7 billion in sales.

Getting a bigger valuation will depend on business execution.

FedEx Freight is targeting 4% to 6% sales growth and 10% to 12% operating profit growth for the "medium term."

That is very Old Dominion-like. Now, FedEx Freight just has to demonstrate the numbers as a stand-alone company.

FedEx Freight will also have to pay down some debt. It starts with more than $4 billion in debt after paying a dividend to FedEx. It wants to have debt-to-earnings before interest, taxes, depreciation, and amortization of about 2.5 times one year on from the spin.

"We know we have a lot of work left to do," says CEO John Smith. "We can't wait to unlock the power and leverage we know we have in this company."

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 01, 2026 11:04 ET (15:04 GMT)

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