$FedEx(FDX)$ is expected to report its fiscal Q3 2025 quarterly result on 20 March 2025 after the market close.
FDX is expected to post revenues of $21.9 billion, up 0.9% from the same period one year ago.
The quarterly earnings per share is expected to come in at $4.56 which would be a 21.2% increase from same period one year ago.
Fedex (FDX) Last Neutral Earnings Call Saw A Decline Of 10.42%
Fedex last neutral earnings call on 19 Dec 2024 saw its share price decline by 10.42%.
The earnings call presented a mixed outlook, with positive steps like the FedEx Freight separation and substantial DRIVE savings, but it was balanced by significant challenges in the industrial economy affecting revenue and profit margins.
FedEx (FDX) Guidance On FedEx Freight Separation
During FedEx's Q2 2025 earnings call, the company provided guidance that reflects an updated adjusted EPS outlook range of $19 to $20, down from the previous range of $20 to $21. This revision is due to softer revenue expectations amid a weak industrial economy affecting B2B volumes, which comprise 60% of FedEx's package business. The company anticipates $2.2 billion in DRIVE savings for FY '25, with significant cost reductions already achieved, such as a 24% decrease in total U.S. domestic flight hours. For the Freight segment, FedEx expects slight revenue declines in the second half due to continued softness in average daily shipments but remains optimistic about future growth with the addition of 300 LTL specialists.
Despite these headwinds, FedEx plans to execute the separation of FedEx Freight within approximately 18 months, aiming to unlock value and create two strong, independent public companies.
Key Metrics to Evaluate For FedEx Upcoming Earnings
Revenue Growth: In fiscal Q2 2025, consolidated revenue declined 1% in the quarter due to the weak industrial economy and challenging year-over-year comparisons.
Profitability
Operating Margin: FedEx has been focusing on cost-cutting (e.g., its DRIVE program targeting $4 billion in savings by FY2025). Assess progress here.
Segment Performance
FedEx Express: Sensitivity to global economic conditions. International export package volumes increased 9% in the quarter, driven by international economy, signaling progress from the Tricolor strategy.
FedEx Ground: E-commerce volume and last-mile efficiency. December volumes are running ahead of forecast with peak surcharge revenue expected to be up year-over-year.
The expiration of the U.S. Postal Service contract posed a significant headwind, affecting operating profit.
FedEx Freight: Demand for less-than-truckload (LTL) services. FedEx reported improved performance in the European market, achieving revenue growth and DRIVE savings with enhanced network optimization.
FedEx Freight operating profit was down $179 million, affected by lower volumes, fuel surcharges, and weight per shipment.
Macro Factors:
Economic Conditions: Recession risks, industrial activity, and consumer spending. The soft global industrial economy constrained results, negatively impacting B2B volumes and LTL markets.
Fuel Costs: Volatility in oil prices impacting transportation expenses.
Labor Dynamics: Wage pressures and union negotiations (e.g., Teamsters’ influence).
Strategic Initiatives:
Cost Reductions: In fiscal Q2 2025, FedEx achieved DRIVE savings of $540 million in Q2, with a target of $2.2 billion in incremental savings for FY '25.
Network Optimization: Merging FedEx Express and Ground operations.
Sustainability Efforts: Investments in electric vehicles and carbon neutrality.
Market Reaction:
Guidance: In previous quarter, FedEx announced the decision to separate FedEx Freight into a separate entity, aiming to unlock significant value for stockholders and position both companies for enhanced focus and competitiveness.
Investor Sentiment: Stock movement post-earnings (e.g., surprises in margins or volume trends).
FedEx (FDX) Price Target
Based on 20 Wall Street analysts offering 12 month price targets for FedEx in the last 3 months. The average price target is $315.50 with a high forecast of $365.00 and a low forecast of $200.00. The average price target represents a 28.36% change from the last price of $245.80.
We might see some pressure from the macro factors affecting how FedEx helped to ship the goods, as the tariffs would have reduced some of the orders, but there might be a surprise increase before the implementation of tariffs as businesses stock up ahead of the tariffs.
We might see FedEx moving close to the higher end of the price target.
Technical Analysis - Exponential Moving Average (EMA)
Though we saw FDX trading below 12-EMA in a downward trend, and RSI is also showing weak momentum, but do note that we are seeing a potential crossover of RSI over RSI MA, that might create a bullish reversal.
This could help to push FDX to trade above the 12-EMA, I am expecting a gap up if FDX turned up with a positive earnings.
Summary
When FedEx’s Q3 2025 results are released, focus on execution against cost-saving targets, volume recovery in key segments, and management’s outlook.
I will be watching how FedEx updates on cost-saving and also the freight separation progress is like, this would be important as it will determine where FedEx would stand in the competition pressure from UPS, Amazon Logistics, and regional carriers.
Appreciate if you could share your thoughts in the comment section whether you think FedEx would be able to show improvement in cost savings and hence a better-than-expected earnings per share.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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