Strong quarter sends shares higher after hours
FedEx reported fiscal third-quarter results that came in well ahead of Wall Street expectations, lifting investor sentiment and pushing the stock higher in extended trading. The parcel and logistics giant also increased its outlook for fiscal 2026, pointing to improving profitability and faster-than-expected benefits from its efficiency program.
The company said it delivered adjusted operating income of $1.68 billion, above consensus expectations, and posted revenue of $24 billion for the quarter. FedEx reported net income of $1.06 billion, or $4.41 per share, up from $909 million, or $3.76 per share, a year earlier.
What FedEx reported vs. expectations
FedEx’s headline figures beat analyst forecasts on both earnings and revenue, reflecting stronger execution and cost discipline across the network.
- Adjusted EPS: $5.25 vs. $4.09 expected
- Revenue: $24.0B vs. $23.43B expected
- Adjusted operating income: $1.68B vs. $1.39B expected
After accounting for spin-off costs and other one-time items, the company reported adjusted EPS of $5.25. Shares rose about 9% in after-hours trading following the release.
Guidance lifted for fiscal 2026
FedEx raised its fiscal 2026 forecast, projecting revenue growth of 6% to 6.5%, above the 5.6% growth analysts were modeling. The company also increased its expectations for profitability, lifting its fiscal 2026 adjusted EPS range to $19.30 to $20.10, up from prior guidance of $17.80 to $19.00.
CEO Raj Subramaniam credited the performance to operational discipline, network resilience, and the growing impact of its digital initiatives, including automation and AI tools being deployed across the system.
Network 2.0 savings now expected to exceed $1 billion
FedEx’s multiyear transformation plan, branded Network 2.0, is aimed at improving efficiency by optimizing how packages move through its facilities and by increasing automation. The company previously targeted around $1 billion in cost reductions tied to this initiative. It now expects the savings to exceed $1 billion, suggesting the program is scaling faster than originally modeled.
This matters because FedEx is trying to improve margins while navigating uneven demand, shifting customer mix, and higher expectations for delivery speed and service reliability.
Freight spinoff remains on track for June 1
FedEx reiterated that FedEx Freight is still on schedule to be spun off into a separate publicly traded company on June 1. The separation is expected to sharpen FedEx’s focus on its core parcel operations while allowing the freight unit to pursue its own capital and operating priorities.
Iran war seen as a modest headwind
On the earnings call, Subramaniam said FedEx expects only modest disruption from the war involving Iran, noting the Middle East represents a relatively small portion of total company revenue. Still, management acknowledged the situation can affect global logistics through airspace constraints, routing changes, and broader macro uncertainty.
