Al Root
FedEx is preparing to spin off its freight division in June. Ahead of that, the company is meeting with investors and analysts to introduce the soon-to-be-new company.
FedEx Freight is a less-than-truckload, or LTL, shipper. LTL serves mainly industrial customers who don't need a full truck and send goods over shorter-haul shipments. Old Dominion Freight Line is a premier LTL shipper, trading for about 38 times earnings expected over the coming 12 months. (FedEx stock trades for about 17 times, which is one reason FedEx Freight is spinning.)
FedEx's LTL business is targeting 4% to 6% sales growth and 10% to 12% operating profit growth for the "medium term."
Those are worthy goals. Old Dominion has produced sales growth of about 6% and operating profit growth of about 8% over the past five years. Looking ahead, Wall Street expects 6% sales growth and 11% operating profit growth for the coming three years.
If FedEx Freight can hit those numbers, its valuation multiple should rise.
FedEx, overall, produced 3% sales growth and 5% operating profit growth over the past five years. Wall Street projects 5% sales growth and 13% profit growth over the coming three years, as the U.S. emerges from a brutal three-year freight recession.
FedEx's operating profit peaked in fiscal year 2022 at almost $7 billion. It earned $6.1 billion in fiscal year 2025, which ended in May.
What FedEx Freight's market value will be when it starts trading is still anyone's guess. It is targeting more than $1 billion in annual free cash flow, similar to what Old Dominion produces. Old Dominion has a market value of about $42 billion.
FedEx Freight probably won't get to that valuation immediately, but that's what investors are hoping for.
FedEx stock was up 3.3% in midday trading, leaving shares up 28% for this year. The S&P 500 and Dow Jones Industrial Average were up 2.1% and 2.2%, respectively. Most stocks were higher after President Donald Trump announced a two-week cease-fire with Iran on Tuesday.
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
April 08, 2026 12:28 ET (16:28 GMT)
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