{ "title": "FedEx After the Freight Spin: Margin Recovery and Valuation Scenarios", "path": "/research/fedex-post-freight-turnaround", "publishedAt": "2026-10-14", "dataAsOf": "2026-10-14", "marketSnapshot": { "fdxCloseDate": "2026-10-13", "fdxClosePriceUsd": 290.59, "dilutedSharesMillions": 236.6, "marketCapUsdBillions": 68.75, "fdxfCloseDate": "2026-10-13", "fdxfClosePriceUsd": 110.09, "retainedFdxfSharesMillions": 29.75, "retainedFdxfStakePct": 19.9, "retainedFdxfMarketValueUsdBillions": 3.28, "inpostEquityCommitmentEurBillions": 2.176, "inpostOwnershipPct": 37.0, "adjustedNonCoreValueUsdBillions": 5.0, "adjustedNonCoreValueMethod": "10% haircut to the October 13 market value of the retained FDXF stake plus a 15% haircut to the approximate USD value of FedEx's InPost equity commitment; rounded to $5.0B." }, "capitalIntensity": [ {"fiscalYear": 2022,"revenueUsdBillions": 93.5,"capexUsdBillions": 6.8,"capexPctRevenue": 7.27}, {"fiscalYear": 2023,"revenueUsdBillions": 90.2,"capexUsdBillions": 6.174,"capexPctRevenue": 6.84}, {"fiscalYear": 2024,"revenueUsdBillions": 87.7,"capexUsdBillions": 5.176,"capexPctRevenue": 5.9}, {"fiscalYear": 2025,"revenueUsdBillions": 87.9,"capexUsdBillions": 4.055,"capexPctRevenue": 4.61}, {"fiscalYear": 2026,"revenueUsdBillions": 94.7,"capexUsdBillions": 3.809,"capexPctRevenue": 4.02} ], "segmentHistory": { "2024": { "domestic": {"revenueUsdBillions": 51.508,"gaapMarginPct": 6.5,"adjustedMarginPct": 7.5,"adjustedOperatingIncomeUsdBillions": 3.89}, "international": {"revenueUsdBillions": 24.835,"gaapMarginPct": 2.2,"adjustedMarginPct": 3.1,"adjustedOperatingIncomeUsdBillions": 0.772} }, "2025": { "domestic": {"revenueUsdBillions": 54.401,"gaapMarginPct": 8.1,"adjustedMarginPct": 8.4,"adjustedOperatingIncomeUsdBillions": 4.584}, "international": {"revenueUsdBillions": 25.337,"gaapMarginPct": 2.3,"adjustedMarginPct": 2.9,"adjustedOperatingIncomeUsdBillions": 0.732} } }, "peerMarginContext": { "asOfDate": "2025-12-31", "fedex": {"domesticAdjustedMarginPct": 8.4,"internationalAdjustedMarginPct": 2.9}, "ups": {"domesticAdjustedMarginPct": 7.7,"internationalAdjustedMarginPct": 15.8}, "boundary": "Segment definitions differ. UPS International is primarily package operations; FedEx International also includes international freight and other revenue." }, "network2": { "optimizedLocationsAsOf2026May31": 410, "usCompletionTarget": "2027-12-31", "annualizedSavingsTargetEnd2026UsdBillions": 1.0, "annualizedSavingsTargetEnd2027UsdBillions": 2.0 }, "management2029": { "consolidatedRevenueUsdBillions": 98, "consolidatedOperatingIncomeUsdBillions": 8, "consolidatedMarginPct": 8, "adjustedFcfUsdBillions": 6, "capexPctRevenue": 4, "domestic": {"revenueUsdBillions": 64,"marginPct": 10}, "international": {"revenueUsdBillions": 29,"marginPct": 8} }, "normalizedFcfModel": { "cashTaxRatePct": 25, "netFinancingCostUsdBillions": 0.8, "depreciationAboveCapexUsdBillions": 0.5, "formula": "normalized FCF = (operating income - net financing cost) \u00d7 (1 - cash tax rate) + depreciation above capex", "scenarios": [ {"id":"bear","label":"Limited international recovery","domesticRevenueUsdBillions":60,"domesticMarginPct":9.0,"internationalRevenueUsdBillions":27,"internationalMarginPct":4.5,"corporateOtherOperatingIncomeUsdBillions":-0.8,"operatingIncomeUsdBillions":5.815,"normalizedFcfUsdBillions":4.261}, {"id":"base","label":"Partial international recovery","domesticRevenueUsdBillions":62,"domesticMarginPct":9.5,"internationalRevenueUsdBillions":28,"internationalMarginPct":6.5,"corporateOtherOperatingIncomeUsdBillions":-0.8,"operatingIncomeUsdBillions":6.91,"normalizedFcfUsdBillions":5.083}, {"id":"target-like","label":"Near management targets","domesticRevenueUsdBillions":64,"domesticMarginPct":10.0,"internationalRevenueUsdBillions":29,"internationalMarginPct":8.0,"corporateOtherOperatingIncomeUsdBillions":-0.8,"operatingIncomeUsdBillions":7.92,"normalizedFcfUsdBillions":5.84} ] }, "valuationModel": { "discountRatePct": 10, "adjustedNonCoreValueUsdBillions": 5.0, "sharesMillions": 236.6, "cases": [ {"id":"bear","label":"Bear","fcf2027UsdBillions":3.6,"fcf2028UsdBillions":4.0,"fcf2029UsdBillions":4.3,"terminalFcfMultiple":12.0,"modeledEquityValuePerShareUsd":226.45}, {"id":"base","label":"Base","fcf2027UsdBillions":4.0,"fcf2028UsdBillions":4.6,"fcf2029UsdBillions":5.1,"terminalFcfMultiple":14.0,"modeledEquityValuePerShareUsd":295.49}, {"id":"bull","label":"Bull","fcf2027UsdBillions":4.3,"fcf2028UsdBillions":5.1,"fcf2029UsdBillions":5.8,"terminalFcfMultiple":15.0,"modeledEquityValuePerShareUsd":350.15} ], "internationalMarginSensitivity": [ {"internationalMarginPct":4,"operatingIncomeUsdBillions":6.21,"normalizedFcfUsdBillions":4.558,"modeledEquityValuePerShareUsd":266.31}, {"internationalMarginPct":5,"operatingIncomeUsdBillions":6.49,"normalizedFcfUsdBillions":4.768,"modeledEquityValuePerShareUsd":277.61}, {"internationalMarginPct":6,"operatingIncomeUsdBillions":6.77,"normalizedFcfUsdBillions":4.978,"modeledEquityValuePerShareUsd":288.9}, {"internationalMarginPct":7,"operatingIncomeUsdBillions":7.05,"normalizedFcfUsdBillions":5.188,"modeledEquityValuePerShareUsd":300.2}, {"internationalMarginPct":8,"operatingIncomeUsdBillions":7.33,"normalizedFcfUsdBillions":5.397,"modeledEquityValuePerShareUsd":311.5} ], "reverseValuation": { "observedFdxPriceUsd": 290.59, "terminalFcfMultiple": 14, "required2029NormalizedFcfUsdBillions": 5.01, "domesticRevenueUsdBillions": 62, "domesticMarginPct": 9.5, "internationalRevenueUsdBillions": 28, "impliedInternationalMarginPct": 6.15 } }, "nearTermEvidence": { "comparisonQuarter": "2025 Q3", "domesticAdjustedMarginPct": 6.7, "internationalAdjustedMarginPct": 3.1, "consolidatedAdjustedMarginPct": 5.1, "domesticInterpretation": [ {"label":"Strong evidence","minPct":7.5,"maxPct":null}, {"label":"Progressing","minPct":7.0,"maxPct":7.4}, {"label":"Little incremental leverage","minPct":6.7,"maxPct":6.9}, {"label":"Negative signal","minPct":null,"maxPct":6.6} ], "internationalInterpretation": [ {"label":"Strong evidence","minPct":4.0,"maxPct":null}, {"label":"Good enough to strengthen the case","minPct":3.5,"maxPct":3.9}, {"label":"Still waiting","minPct":3.0,"maxPct":3.4}, {"label":"Negative signal","minPct":null,"maxPct":2.9} ] }, "boundaries": [ "FedEx Freight is discontinued operations after the June 1, 2026 spin; historical consolidated fiscal-year trends include Freight unless explicitly labeled continuing operations.", "FedEx Supply Chain was sold on October 1, 2026. The study does not assume the full $1.4B enterprise value became excess cash because after-tax cash proceeds were not disclosed.", "The retained FDXF stake and InPost investment are treated as non-core assets and haircutted in the valuation model; those haircuts are assumptions, not observed market values.", "UPS segment margins are context only because segment definitions differ materially.", "Forward operating, FCF and equity-value outputs are scenario calculations, not forecasts, probabilities or investment ratings.", "The first full operating quarter after the Freight separation had not been reported as of the study date." ], "sources": [ {"id":"fedex-recast-calendar-2025","title":"FedEx recast historical financial information for calendar 2025 and 2024","publisher":"FedEx / SEC","url":"https://www.sec.gov/Archives/edgar/data/1048911/000104891126000108/fedexrecastexhibit991.htm","asOfDate":"2026-07-21"}, {"id":"fedex-2026-10k","title":"FedEx fiscal 2026 Form 10-K","publisher":"FedEx / SEC","url":"https://www.sec.gov/Archives/edgar/data/1048911/000104891126000105/fdx-20260531.htm","asOfDate":"2026-05-31"}, {"id":"fedex-2026-investor-day","title":"FedEx Corporation Hosts 2026 Investor Day","publisher":"FedEx","url":"https://investors.fedex.com/news-and-events/investor-news/investor-news-details/2026/FedEx-Corporation-Hosts-2026-Investor-Day/default.aspx","asOfDate":"2026-02-12"}, {"id":"fedex-freight-spin","title":"FedEx Completes Spin-Off of FedEx Freight","publisher":"FedEx","url":"https://investors.fedex.com/news-and-events/investor-news/investor-news-details/2026/FedEx-Completes-Spin-Off-of-FedEx-Freight/default.aspx","asOfDate":"2026-06-01"}, {"id":"fedex-supply-chain-sale","title":"FedEx Completes Sale of FedEx Supply Chain to CMA CGM Group","publisher":"FedEx","url":"https://investor.fedex.com/news-and-events/investor-news/investor-news-details/2026/FedEx-Completes-Sale-of-FedEx-Supply-Chain-to-CMA-CGM-Group/default.aspx","asOfDate":"2026-10-01"}, {"id":"fedex-cy2026-outlook","title":"FedEx Reports Strong Fourth Quarter and Full-Year Results","publisher":"FedEx","url":"https://investors.fedex.com/news-and-events/investor-news/investor-news-details/2026/FedEx-Reports-Strong-Fourth-Quarter-and-Full-Year-Results/default.aspx","asOfDate":"2026-06-23"}, {"id":"inpost-consortium-offer","title":"Consortium offer for InPost","publisher":"InPost","url":"https://inpost.eu/investors/consortiums-offer","asOfDate":"2026-10-07"}, {"id":"ups-2025-10k","title":"UPS 2025 Form 10-K","publisher":"UPS / SEC","url":"https://www.sec.gov/Archives/edgar/data/1090727/000162828026008432/ups-20251231.htm","asOfDate":"2025-12-31"}, {"id":"fedex-fy25-10k","title":"FedEx fiscal 2025 Form 10-K","publisher":"FedEx / SEC","url":"https://www.sec.gov/Archives/edgar/data/1048911/000104891125000011/fdx-20250531.htm","asOfDate":"2025-05-31"}, {"id":"fedex-fy22-results","title":"FedEx fiscal 2022 full-year results","publisher":"FedEx / SEC","url":"https://www.sec.gov/Archives/edgar/data/1048911/000095017022012036/fdx-ex99_1.htm","asOfDate":"2022-05-31"}, {"id":"fedex-fy24-results","title":"FedEx fiscal 2024 full-year results","publisher":"FedEx / SEC","url":"https://www.sec.gov/Archives/edgar/data/1048911/000095017024077290/fdx-ex99_1.htm","asOfDate":"2024-05-31"}, {"id":"fdx-price-history","title":"FedEx stock price history","publisher":"Stock Analysis","url":"https://stockanalysis.com/stocks/fdx/history/","asOfDate":"2026-10-13"}, {"id":"fdxf-price-history","title":"FedEx Freight stock price history","publisher":"Stock Analysis","url":"https://stockanalysis.com/stocks/fdxf/history/","asOfDate":"2026-10-13"} ] }