By Al Root

FedEx Freight bucked the market trend on Friday, making it the best-performing stock in the S&P 500 on a tough day for the market.

Shares of the company, which spun out of FedEx on June 1, were up 9% in late trading at $172.39. In comparison, the S&P 500 and Nasdaq Composite were off 1.7% and 2.9%, respectively. A hot jobs report stoked fears of interest-rate hikes.

FedEx Freight is likely avoiding the drawdown because shares are very new. They are in their own world right now. FedEx investors who got shares in the spin are deciding whether they want them and other investors are evaluating the stock as Wall Street starts writing research on the company.

Shares closed just below $150 on Monday, down from the peak of about $185 per share during when-issued trading. (Spin stocks will often trade before the spin is complete, helping investors with price discovery.) The stock climbed back to almost $158 on Thursday before Friday's big jump.

There have been lots of research reports, but none were notable on Friday. For now, eight analysts cover the stock. Three, or 38%, rate shares Buy. The average Buy-rating ratio for S&P 500 stocks typically ranges from 55% to 60%.

The average analyst price target for FedEx Freight stock is about $168 per share.

Most analysts see potential in the company, but they want to see management execute -- meaning it posts solid top- and bottom-line growth while paying down debt.

FedEx Freight stock is trading for about 31 times calendar year 2027 earnings. Old Dominion Freight Line, a competing less-than-truckload player, trades for closer to 39 times.

Less-than-truckload, or LTL, shippers typically serve industrial customers that don't need a full truck to send goods relatively short distances. Old Dominion is an LTL leader with better profit margins and less debt.

FedEx Freight is expected to end the year with about $4 billion in debt, or about 2.5 times estimated earnings before interest, taxes, depreciation, and amortization, or Ebitda. The debt is due to FedEx Freight paying FedEx $4.1 billion in the spinoff.

Old Dominion has essentially no debt and produces Ebitda margins close to 30%, more than twice what FedEx Freight is expected to generate early in its life as a stand-alone company. FedEx Freight's Ebitda margins are expected to be around 13% for this calendar year.

The challenge for FedEx Freight management is to raise those margins. Eventually, shares will trade based on company performance and on whatever the broader economy is doing. For now, investors are still figuring things out.

That turned out to be a benefit on Friday.

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

June 05, 2026 15:18 ET (19:18 GMT)

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