Al Root
FedEx meets with investors on Thursday to review its long-term plans for shareholder value.
Investors should be encouraged.
For starters, FedEx said fiscal third-quarter earnings should "exceed the consensus average." That means earnings per share of about $4 or higher.
FedEx stock was down 0.4% at $365.88 in premarket trading, while the S&P 500 and Dow Jones Industrial Average futures were up about 0.2%.
The earnings beat was the appetizer. In fiscal year 2029, FedEx expects to produce revenue of $98 billion, operating income of $8 billion, and free cash flow of $6 billion. All those metrics are ahead of Wall Street estimates.
Backing out FedEx Freight, which is due to be spun off in June and will host its own investors day in April, analysts project sales of about $93 billion, operating income of about $6.4 billion, and free cash flow of less than $6 billion, according to FactSet.
The long-term goal implies annual sales growth of about 4%, about 1 percentage point better than current estimates.
Getting there will depend on growing higher-profit businesses, such as healthcare and aerospace, as well as squeezing out more costs through network simplification and automation.
"FedEx is now entering a new era as we build the most flexible, efficient, and intelligent network in history. Our vision is simple: to make supply chains smarter for everyone," CEO Raj Subramaniam said in a news release. The company's digital intelligence "is a true force multiplier that will support durable value with profitable growth, higher margins, stronger cash generation, and increased returns for our stockholders."
Things look good. How the stock will trade is anyone's guess. Expectations are running high. Coming into Thursday trading, FedEx stock was up an impressive 27% year to date, leaving shares trading for about 18 times earnings expected over the coming 12 months.
That's an elevated PE ratio for FedEx, but below the 22 times multiple for the S&P 500. FedEx's goals imply annual operating profit growth well north of 10%. That, if investors believe it, would justify, at least, a market multiple.
Investors typically take a while to be convinced. But the possibility of improved profitability and cash flow should keep them interested in FedEx for the foreseeable future.
Write to Al Root at allen.root@barrons.com
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(END) Dow Jones Newswires
February 12, 2026 09:49 ET (14:49 GMT)
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