FedEx raises 2026 revenue growth forecast to about 12% after quarterly profit improves
Key Facts
FedEx raised its calendar 2026 revenue growth forecast to about 12% year over year, from about 11% in its previous forecast, after results improved in the third quarter of the calendar year, which ended on September 30. Quarterly revenue was $22.9 billion, compared with $20.4 billion in the same period of 2025, while adjusted operating income rose to $1.20 billion from $1.03 billion. The adjusted operating margin increased to 5.3% from 5.1%, and adjusted diluted earnings per share were $3.74, compared with $2.93 a year earlier. The company said the operating improvement came as core parcel yield and volumes increased and it continued to reduce structural costs. Chief Executive Raj Subramaniam said the company "is winning in the premium segments while we optimize our network," adding that this supports the higher annual forecast.
FedEx raised its 2026 adjusted diluted earnings per share forecast to a range of $18.00–$18.60, compared with the previous range of $16.90–$18.10. This measure excludes mark-to-market adjustments for certain items, a debt extinguishment gain, and restructuring and exit costs. In the quarter, improved adjusted profitability came alongside pressures the company said included higher purchased transportation costs, wages, variable compensation and changes in global trade policy. By segment, operating income rose in International Express, but the operating margin in U.S. Domestic Express declined to 6.6% from 6.8% a year earlier. Reuters cited the decline among factors accompanying the stock's drop in extended trading.
Reported net income for the quarter included a $1.2 billion loss on the investment FedEx retained after the FedEx Freight separation, explaining part of the difference between continuing operations results and adjusted operating performance. The company completed the separation of the unit on June 1, 2026, retaining a 19.9% ownership stake; the carrying value of the retained securities was $3.3 billion on September 30. FedEx received about $4.1 billion in distributions from the unit after the separation and used those funds and available cash to finance bond repurchase offers. The offers targeted debt with an aggregate principal value of about $4.9 billion and resulted in a pretax gain of $627 million, according to a measure that is not in accordance with generally accepted accounting principles. Available cash at the end of September was $8 billion, including about $2.7 billion in customs duty refunds that the company said it is holding to return to customers.
Between June and September, FedEx repurchased $2.0 billion of shares, or about 6.3 million shares, and said the lower number of shares outstanding added $0.02 to quarterly diluted earnings per share. A further $4.3 billion remained available under the buyback authorization on September 30. After the quarter ended, the company completed the sale of FedEx Supply Chain to CMA CGM Group on October 1 for about $1.4 billion. The deal is part of business portfolio changes that coincided with the FedEx Freight separation, while FedEx retained a stake in the latter unit. The company's stock closed at $304.58 on October 28, compared with $307.10 in the previous session; Reuters said the shares fell about 4% in extended trading.
The company kept its calendar 2026 capital expenditure forecast at $3.9 billion, with investment directed toward improving its network and efficiency, and upgrading its fleet, facilities and automation, and kept expected pension contributions at $475 million. It is set to raise average parcel shipping rates by 5.9% effective January 4, 2027. FedEx said its forecast assumes its current economic outlook and expected fuel prices continue, and that there are no further adverse economic, geopolitical or international trade developments. The company's fourth-quarter 2026 earnings call is scheduled for February 2, 2027.