FedEx Corp (NYSE:FDX, XETRA:FDX) shares fell on Wednesday following its latest earnings report, even as Bank of America said the company continues to show strong underlying earnings momentum, with the post-earnings decline driven more by reporting-transition complexity than by operational weakness.
FedEx reported adjusted earnings per share of $6.31 for fiscal fourth-quarter 2026, up 4% year over year and ahead of Bank of America and consensus estimates of roughly $5.95 and $5.97, respectively.
The beat was driven primarily by strength in the Freight segment, which delivered higher-than-expected operating income, while the Express business also contributed positively on improved international export volumes, pricing discipline, and favorable mix trends.
According to Bank of America, the quality of the quarter was broadly stronger than expected, with momentum in pricing, mix, and cost execution continuing to support profitability across the network.
Freight was the standout contributor, with operating income of $363 million coming in $71 million above the firm’s forecast, supported by revenue per shipment growth of 11% year over year versus expectations for low-single-digit gains.
Express also outperformed, with revenue up 14% year over year, well above the bank’s 8% estimate, driven by stronger yields and international volume growth of 5% versus expectations of 2%.
Despite the solid results, Bank of America noted that investor reaction was dampened by FedEx’s introduction of a transition-period outlook tied to its shift toward calendar-year reporting.
The company forecast earnings growth of about 20% year over year for the second half of calendar 2026 and provided a full-year calendar 2026 EPS range of $16.90 to $18.10. Management also outlined June–December 2026 EPS of about $11.30, which it said bridges into the broader calendar-year outlook and reflects normal seasonality alongside one-time impacts from incentive compensation costs and stranded Freight expenses.
The bank’s analysts believe that this new framework created “near-term noise” in earnings comparability, as fiscal and calendar-year figures overlap and make near-term trends harder for investors to interpret.
They noted that FedEx expects a larger portion of transition-period earnings to be concentrated in fiscal fourth-quarter 2026, reflecting peak-season strength.
Bank of America reiterated that, despite the reporting complexity, the underlying transformation story remains on track. The firm highlighted ongoing benefits from network integration, pricing discipline, and cost actions across both Domestic and International segments, with management continuing to target margin improvement through the transition period.
The firm maintained a ‘Buy’ rating on FedEx and raised its price objective to $378 from $376, valuing the shares at 17.5 times its revised calendar 2027 EPS estimate, slightly down from 18.5 times previously.
Bank of America also raised its 2027 EPS forecast by 6% to $21.60 from $20.28, citing stronger-than-expected operating income trends and improved visibility into margin expansion.
Bank of America said it continues to see mid-teens operating income compound annual growth potential through 2029, supported by sustained pricing discipline, efficiency gains, and continued execution of FedEx’s long-term network optimization strategy.
FedEx shares were down 1.5% at about $313 on Wednesday afternoon.