Upbeat FedEx Forecast Makes Holiday Sales Prospects Jollier

In less than a week, the North American Aerospace Defense Command will conduct its annual operation tracking Santa’s circumnavigation of the globe. Unfortunately, because of the government shutdown this fall, there’s not enough data on the elfen labor at his workshop to get a clear picture of Christmas demand. 

Thankfully, that’s what FedEx’s earnings are for. The shipping company reported an adjusted profit of $1.1 billion in its latest quarter on Thursday, up 25% year over year, and revenue of $23.5 billion, up 7.7% year over year. Both figures bested Wall Street’s expectations and bode well for overhaul efforts at FedEx as well as the shipper-friendly holiday season.

Repackaged Offering

FedEx shares have gained a meager 2% in 2025, with quarterly revenue still lagging the company’s $24.4 billion pandemic peak in 2022. The end of lockdowns, which were a gift-wrapped turbocharger to the bottom lines of parcel firms, gave way to years of inflation followed by tariffs, putting a hurt on volumes and margins. Sales were flat or declined for three years until the quarter ending in August. That’s when FedEx delivered Wall Street a surprise 3% growth in year-over-year revenue to $22.2 billion. That helped turn investors bullish, with shares up 27% since late September.

Wall Street is also watching a handful of overhaul initiatives designed to unlock shareholder value. In the spring, FedEx won new business from Amazon after UPS reduced its ties with the e-commerce giant, citing low margins. The new Amazon partnership is expected to be fully onboarded by February. Then there are plans to spin off FedEx’s freight business by the middle of 2026, which executives say will position the two resulting companies to better focus on their own operations and capital allocation. Finally, an ongoing cost-reduction program is expected to trim $1 billion in fiscal 2026. FedEx’s latest earnings, announced Thursday, heralded more fuel for the rally:

• In September, FedEx forecasted fiscal 2026 sales growth of 4% to 6%. On Thursday, executives upped that forecast to 5% to 6%.
• FedEx now projects an annual profit of $17.80 to $19 per share, up from its previous $17.20 to $19 range. The company said package yields and volumes rose in its Federal Express segment, a sign that the traditional spike in holiday shipping hasn’t been disrupted by tariffs (FedEx previously warned of a $1 billion hit to its profits, mostly due to fewer shipments from China).

Fleeting: Following the fatal crash of an MD-11 freighter plane operated by UPS last month, US officials ordered the grounding of the aircraft, which is also used by FedEx. Stifel analysts said the MD-11 grounding’s impact, which applies to 5% of FedEx’s fleet, would prove “minimal.”