TLDR
- FedEx surges 5.7% after Q1 beat, margin gains, buybacks, and spin-off update.
- FDX jumps post-earnings: $22.2B revenue, EPS up, Freight spin-off on track
- Solid Q1 for FedEx: Higher margins, buybacks, and steady spin-off progress.
- FDX hits $239.50 in after-hours on strong Q1 and Freight spin-off timeline.
- FedEx lifts FY26 outlook with Freight spin-off, cost cuts, and rate hikes.
FedEx (FDX) shares closed at $226.50, reflecting a modest 0.32% gain during regular trading. The stock jumped in after-hours trading to $239.50, up 5.74%, following its Q1 fiscal 2026 earnings report.
Strong Revenue and Operational Execution Support Quarterly Performance
FDX posted fiscal Q1 revenue of $22.2 billion, marking a year-over-year increase from $21.6 billion. The company reported adjusted operating income of $1.30 billion, up from $1.21 billion a year earlier. Operating margin improved to 5.8% from 5.6%, indicating better cost efficiency.
Adjusted net income reached $0.91 billion, compared to $0.89 billion in the prior-year quarter. Diluted earnings per share rose to $3.83, up from $3.60 in fiscal 2025’s Q1. Management cited growth in U.S. domestic package revenue and structural cost reductions as key performance drivers.
Despite a non-recurring tax expense of $16 million, results remained strong. Domestic and international priority package yields rose, while volumes also increased. Higher transportation and wage costs, and the end of the U.S. Postal Service contract partially offset these gains.
FedEx Freight Spin-Off Remains on Track for June 2026
FDX confirmed that the FedEx Freight separation is progressing as scheduled and remains a key strategic initiative. The spin-off will form a separate publicly traded company listed under the ticker FDXF. FedEx aims to complete the transaction by the end of June 2026.
In August, the company submitted a confidential Form 10 to the SEC as part of the regulatory process. The company also requested a private letter ruling from the IRS to ensure tax efficiency. These steps align with its long-term strategy to streamline operations and unlock segment value.
FedEx Freight’s Q1 results declined due to lower revenue and higher wage expenses. However, the business continues to focus on expanding its dedicated sales force to support growth. The separation is expected to improve strategic clarity and operational flexibility for both entities.
Share Buybacks and Rate Hikes Strengthen Outlook
FDX repurchased $0.5 billion worth of shares, reducing share count by 2.2 million. This buyback lifted EPS by $0.02 and reflected strong liquidity, with $6.2 billion in cash on hand. The company still has $1.6 billion remaining under its current authorization.
FDX plans to continue repurchasing stock, subject to liquidity and market conditions throughout fiscal 2026. This disciplined capital allocation signals confidence in the company’s growth trajectory. Shareholder returns remain a key priority alongside operational transformation.
FedEx also reiterated its 5.9% average rate increase for parcel and LTL shipments, effective January 5, 2026. The move supports margin expansion and offsets rising input costs. Pricing power remains a vital component of FedEx’s financial strategy moving forward.
