By Al Root

Investors have a new logistics company to invest in.

The long-awaited spinoff of FedEx Freight is just about done, and shares of the newly independent less-than-truckload business start trading on Monday, June 1. The stock symbol will be "FDXF."

Less-than-truckload, or LTL, serves mainly industrial customers that 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 relatively 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 year 2026 sales of $8.7 billion and operating profit of $1.1 billion. (For FedEx as a whole, including Freight, Wall Street projects almost $94 billion in sales and $6.5 billion in operating income.)

If FedEx Freight shares are trading on a when-issued basis at about $185. But if they were to trade like Old Dominion, they could be worth $275 apiece.

Old Dominion is more profitable, though. It's expected to generate a 2026 operating profit of about $1.5 billion from $5.7 billion in sales.

When-issued means that someone has convinced someone else to provide shares at that price when they actually exist. When-issued trading gives investors a chance to gauge the market's view of a new stock's value.

Shareholders are getting one share of FedEx Freight for every two FedEx shares owned. FedEx is retaining a roughly 20% stake in Freight.

A big gain in the new stock is possible, but getting FedEx Freight shares higher 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." Old Dominion has produced average annual sales growth of about 6% and operating profit growth of about 8% over the past five years. Looking ahead, Wall Street expects 6% sales growth and 11% operating profit growth for the coming few years.

If FedEx can match its peers' growth and margins, its valuation should look similar as well.

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.

(END) Dow Jones Newswires

May 29, 2026 10:11 ET (14:11 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.