FedEx Stock Beats Q4 2025 Estimates: Is Now the Time to Invest?

The stock market in 2025 has been a wild ride, with geopolitical tensions, tariff impacts, and inflation fears keeping investors on edge. Amid this chaos, FedEx Corporation (NYSE: FDX), the Memphis-based delivery giant, has grabbed headlines with a strong performance in its fiscal fourth quarter of 2025, ending May 31.

By beating Wall Street’s earnings and revenue expectations and announcing ambitious cost-cutting plans, FedEx is showing resilience in a tough environment. But with FedEx stock down 19% year-to-date and mixed guidance for the next quarter, you might be wondering: Is now the right time to invest in FedEx stock? In this article, I’ll dive into FedEx’s recent success, break down its forecasts, and weigh the pros and cons of investing in the company today.

FedEx’s Q4 2025 Performance: A Closer Look

FedEx reported its fiscal fourth-quarter results on June 24, 2025, and the numbers were impressive, especially given the challenging global trade environment. Here’s how the company stacked up against Wall Street expectations:

• Earnings Per Share (EPS): FedEx delivered an adjusted EPS of $6.07, surpassing the consensus estimate of $5.84 by 4.59%. This compares to $5.94 per share a year earlier, showing steady earnings growth despite headwinds.
• Revenue: The company posted $22.22 billion in revenue, beating expectations of $21.79 billion by 1.65%. This marks a slight 0.5% increase from $22.1 billion in the same quarter last year.
• Net Income: FedEx reported a net income of $1.65 billion, up from $1.47 billion a year ago, reflecting improved profitability even after one-time charges like retirement plan accounting costs.
• Package Volume Growth: U.S. daily package volume rose 6% year-over

Key Drivers of the Beat

Several factors powered FedEx’s strong quarter:

• Cost-Cutting Success: FedEx hit its $4 billion cost-cutting goal under its DRIVE program, launched in 2023 to boost long-term profitability. CEO Raj Subramaniam emphasized that these “structural cost reductions” helped the company navigate “ongoing headwinds” like weak global demand and tariff pressures.
• Operational Efficiency: The company improved on-road productivity and reduced costs per package in its European operations for two consecutive years. This focus on efficiency boosted margins despite a drop in Express segment operating margins from 5.0% to 4.1%.
• Domestic Strength: The 10% surge in U.S. ground home delivery volume reflects robust e-commerce demand, offsetting weaker international export volumes impacted by tariffs and trade policy changes.
• Strategic Initiatives: FedEx’s Network 2.0 integration, aimed at streamlining its Express and Ground operations, is on track to deliver $2 billion in additional savings by fiscal 2026.

Despite the strong results, FedEx stock fell about 5% in after-hours trading due to cautious guidance for the first quarter of fiscal 2026, which we’ll explore next.

Why the Stock Dropped Despite the Beat?

Despite the upside surprise, FedEx shares plunged ~5–6% in after-hours trading. The main culprit? Lack of full-year guidance and a weak fiscal first quarter of 2026 (June–August 2025) outlook:

• EPS Guidance: Q1 EPS outlook was $3.40–$4.00, below expectations of ~$4.05. This cautious outlook reflects a $170 million revenue headwind from international exports, primarily due to U.S. tariffs and changes in duty-free policies like the de minimis rule.
• Revenue Outlook: Revenue projected to grow just 0–2%, barely above Street estimates.
• Operating Income: At the midpoint EPS of $3.70, FedEx anticipates adjusted operating income of $1.25 billion, driven by a $130 million tailwind from revenue growth and cost efficiencies, offset by the $170 million international headwind.
• Freight Spin-Off: FedEx is moving forward with its December 2024 plan to spin off its Freight division by June 2026, creating two publicly traded companies. This could unlock value by allowing each entity to focus on its core strengths.
• Global tariffs, especially on U.S.-China trade, and loss of USPS contract weighed heavily.

Analysts noted that the loss of a $1.75 billion U.S. Postal Service contract, ending September 29, 2025, will pressure Express segment margins in the short term. However, eliminating related costs is expected to improve profitability in fiscal 2026 and beyond.

Is FedEx On The Track To Success?

FedEx’s ability to exceed expectations stems from its strategic focus on cost management and operational agility:

• DRIVE Program Success: FedEx’s discipline is demonstrated by the $4 billion cost-cutting milestone, which was reached in spite of inflationary headwinds and one fewer operational day. Plans for an additional $1 billion in savings in fiscal 2026 suggest sustained efficiency gains.
• E-Commerce Growth: The 10% increase in U.S. ground home delivery volume reflects FedEx’s strength in capturing e-commerce demand, a trend expected to continue as online shopping grows.
• Global Network Optimization: FedEx is redirecting resources to high-demand routes, mitigating the impact of trade disruptions in the Asia – U.S. lane. CFO John Dietrich emphasized this flexibility during the earnings call.
• Dividend Increase: FedEx raised its annual dividend by 5% to $5.80 per share for fiscal 2026, marking its fifth consecutive year of growth, signaling confidence in long-term cash flow.

However, challenges like tariff-related volume headwinds and the end of the USPS contract highlight risks that investors need to consider.

The Outlook: Forecast and Analyst Views

FedEx paused full-year guidance for FY 2026, citing volatility in trade policies. For Q1, revenue is expected flat to +2%, with EPS slightly under consensus.

Despite the near-term caution, analysts remain bullish. Of 14 analysts, 12 rate it a “Buy”, with an average target of $275. Citi, in particular, holds a Buy rating with a $267 target.

Is It Worth Investing in FedEx Stock Now?

With FedEx stock down 19% year-to-date, is it a good time to invest $1,000? Let’s weigh the pros, cons, and key factors to help you decide.

Reasons to Invest

1. Strong Fundamentals: FedEx’s Q4 beat, with EPS of $6.07 and revenue of $22.22 billion, shows resilience in a tough market. Its net margin of 4.1% and return on equity (ROE) of 3.42% outperform industry averages, reflecting solid financial health.
2. Cost-Cutting Momentum: Achieving $4 billion in savings and targeting another $HDR: $1 billion in fiscal 2026, plus $2 billion from Network 2.0, could boost margins significantly.
3. Freight Spin-Off Potential: The planned spin-off of FedEx Freight by June 2026 could unlock shareholder value by creating two focused companies, potentially boosting stock prices.
4. Dividend Appeal: The 2.53% dividend yield and 5% increase per share make FedEx stock attractive for income investors.
5. Analyst Optimism: Analysts’ average 12-month price target is $275. Deutsche Bank reiterated a “buy” rating, citing FedEx stock pricing power.

Reasons to Hold Off

1. Cautious Guidance: The Q1 EPS forecast of $3.40–$4.00, below the $4.06 estimate, led to a 5% after-hours drop, reflecting investor concerns about short-term profitability.
2. Geopolitical and Tariff Risks: A $170 million headwind from tariffs and duty-free policy changes could pressure international revenue, especially in the Asia-U.S. lane.
3. Market Volatility: FedEx stock has been volatile, dropping 19% year-to-date, and geopolitical tensions (e.g., Iran-Israel conflict) could further impact global trade.
4. Execution Risks: Some analysts expressed concerns about FedEx’s “ambitious” fiscal 2026 targets, citing Network 2.0 integration challenges and stagnant demand.

Bottom Line: If you believe tariffs remain in check and trade volatility eases, FedEx stock could rebound strongly toward analyst targets. But if geopolitical tensions persist, near-term risk remains.

Who Should Invest?

FedEx stock is a good fit for:

• Long-Term Investors: Those betting on cost-cutting and the Freight spin-off could see significant upside by 2026, with analysts forecasting EPS growth to $20.51.
• Income Seekers: The 2.53% dividend yield offers steady returns in a volatile market.
• Value Investors: With a P/E ratio of 14.2x and a fair value assessment suggesting slight undervaluation, FedEx stock may appeal to those seeking value.

However, risk-averse investors or those focused on short-term gains may want to wait for a better entry point, given the stock’s volatility and cautious Q1 guidance.

How to Invest in FedEx Stock?

If you decide to buy FedEx stock, here’s how to approach it:

1. Choose a Brokerage: Use a low-fee platform like Fidelity or Schwab.
2. Timing Your Buy: Wait for a dip below $225.
3. Dollar-Cost Averaging: Spread your money over a few weeks (e.g., $250 weekly) to reduce exposure to volatility, given FedEx stock 19% year-to-date decline.
4. Set Stop-Losses: Place a stop-loss 7–10% below your purchase price (e.g., $210 if bought at $225) to limit losses in case of a sell-off.
5. Monitor Key Events: Watch for updates on the Freight spin-off, tariff developments, and Fed rate decisions, which could impact FedEx stock.

Risks to Consider

Investing in FedEx stock comes with risks:

• Tariff and Trade Headwinds: The $170 million international revenue hit could persist if U.S.-China trade tensions escalate.
• Economic Slowdown: As a global economic bellwether, FedEx could face pressure if consumer spending weakens due to inflation or high interest rates.
• Execution Challenges: The Network 2.0 integration and Freight spin-off carry execution risks.
• Stock Volatility: The after-hours drop post-earnings and 19% year-to-date decline highlight FedEx’s sensitivity to guidance and market sentiment.

Four Other Shipping Stocks to Watch Now

United Parcel Service (NYSE:UPS)

Why consider: UPS controls more ground volume in U.S. shipping and is less exposed to international tariffs than FedEx.

Growth drivers: Increased e-commerce, selective pricing power, and operational efficiency.

When to buy: On dips tied to macro news; strong quarterly results and raised guidance would offer a good trigger.

XPO Logistics (NYSE: XPO)

Why consider: A strong player in freight and logistics with growing e-commerce and LTL services.

Catalysts: High-margin digital freight platforms, expansion into Europe.

When to buy: Following a quarterly beat or improved freight rates—watch for earnings above expectations.

Matson, Inc. (NYSE: MATX)

Why consider: Specialist in Pacific shipping, including U.S.–Asia and Hawaii routes—less affected by tariffs.

Catalysts: Infrastructure investments and sustained Asia–U.S. cargo demand.

When to buy: Around seasonally strong shipping demand periods—typically Q2 and Q3.

ArcBest Corporation (NASDAQ: ARCB)

Why consider: A hybrid offering both LTL (less-than-truckload) and integrated logistics services.

Strengths: Diversified revenue streams and a strong last-mile network.

When to buy: On signs of boost in freight rates or logistics demand, especially post-earnings.

Timing and Strategy

Final Verdict: Is FedEx Stock Worth It?

FedEx stock provides a solid play in the logistics space: strong Q4 results, dependable cash flow, and market share in a sector with long-term tailwinds. The recent dip on cautious guidance offers a potential buying opportunity—especially if global trade begins to stabilize.

Complement FedEx with diversified picks—UPS, XPO, Matson, ArcBest—to balance exposure to domestic, international, freight, and logistics trends. With smart entry timing and risk management, you can benefit from a sector rebounding post-tariff turbulence.