FedEx stock jumps on outlook, buyback plans

FedEx (FDX) reported fourth quarter earnings that topped Wall Street expectations. The shipping giant reported adjusted earnings of $5.41 per share compared to an estimate of $5.34. Revenue of $21.1 billion was in line with estimates.
For the full year 2025, FedEx sees adjusted earnings per share in a range of $20.00 to $22.00 versus an expectation of $20.85. For revenue, the company expects low-to-mid single-digit percent growth year-over-year.

FedEx also said it plans to repurchase up to $2.5 billion worth of shares in fiscal 2025.

Pence Capital Management CIO Dryden Pence says there are a few things that are benefiting FedEx. He points to a re-acceleration in e-commerce and improved margins. He also likes the share buyback, saying that all those things are "positive trends" for the stock.

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This post was written by Stephanie Mikulich.

Video transcript

Numbers coming out from FedEx Uh, and in particular, the forecast is getting some attention here.

The company's fiscal 2025 adjusted earnings per share, it is predicting, will be at 20 to $22 a share.

21 right in the mid point there is above the 2085 that analysts had been anticipating.

You can see, uh, revenue coming in in line with estimates and adjusted earnings per share at 5.

41 a little bit ahead of what analysts had been anticipating.

The company says For fiscal 2025 it is expecting a buyback of up to $2.5 billion worth of its shares so that also supportive of the shares.

And they are seeing a 9% gain here in, uh, just as we see the the first blush reaction to those numbers, Um, also, we we got the statement here from from the company as well.

Josh, what stands out to you?

Well, yeah.

I mean, is it why why you gotta look at FedEx even more broadly, You know, obviously we we are looking at as a kind of economic bellwether.

You know, people, look at this as sort of a read on the consumer where they're at and kind of where, where they're headed.

I think guidance is a big focus.

I think also that the cost cutting efforts during obviously FedEx has been working to get, you know, leaner and meaner.

Um, the stock had not done a whole lot heading into the print.

I mean, it was basically flatten up single digits over the past 12 months, but at least initially, Nice.

Nice popular in the after hours.

Yeah, and I wanted to, um I was wanted to focus on some comments.

Also, that Raj subman and, uh, made he is the CEO of FedEx.

He talked about making significant progress in fiscal 2024.

This is their last quarter of their fiscal year, um, and four consecutive quarters of expanding operating income and margin that he is highlighting in a challenging revenue environment.

Um, and he also talked about the, uh, efforts to try to transform the company here.

And he says momentum is going to continue in fiscal 2025.

Remember, um, FedEx has experienced some setback, including losing the U SPS, uh, contract to UPS.

That was something that happened in the past year.

So, um, this looks like a bit of a relief for investors up almost 10% here in the after hours drive any any, um, views takes on FedEx here or transports more broadly.

Well, we we we like FedEx and it exists in in some of our our investment trusts.

And I think what you're seeing is two or three things going on here first.

This is again that broadening out thing we just talked about because you're beginning to see that earnings in real time.

It's playing out in real time, which is a good thing.

And but I But I also think you're seeing AAA re acceleration of E commerce, and I think that that's gonna help FedEx all the way through.

As we you know, Ecommerce kind of peaked and covid and then kind of came back down.

And now we're seeing a re aeration in in the growth of that.

That's gonna be, uh, I think a creative to to FedEx I. I like stock buybacks When a CFO thinks his company is worth a lot more than everybody else does.

He knows more about the company.

Anybody else so I think that all of those things are are positive, uh, you know, trends that we can see.

And I think that you're again cost cutting, getting, you know, that whole margin expansion thing we're talking about.

So I think that this falls into into that and and that's that's a That's a favourable thing for us.

How long you know FedEx talking about continuing to try to get costs in order, get new discipline here not just for FedEx, but more broadly for companies.

Where do you think we are in that cycle?

Or do you think that that cost discipline is here to stay for a while?

I think cost is, you know, back when we had peaking inflation, whether you needed to raise your prices or not, you did.

You had a wonderful excuse, right?

So?

So everybody was able to raise their prices, but then they needed to come in behind that and actually get impose some discipline.

And so I think cost cutting is now gonna get very important to people.

They can.

They raise their prices almost as much as they can.

You're seeing some consumer push back on that.

So now if you wanna expand your margins.

You've got to have some discipline.

You now know what your cost of capital is.

The next move there is down.

Now let's get our operations straight and let's try to fix.

So I think FedEx is Is recognising that and playing right into into that?

So, you know, going through this quarter, next quarter and next quarter, I think they're they're, you know, headed in the right direction.

But I think you're see more and more companies coming out and say we're gonna impose some discipline here.

And I mentioned right.

I mean, people, you know, folks do, like, still do look to FedEx as a kind of bellwether kind of the macro the consumer.

Do you use it for For that as well, does it?

Do you think it gives you a read?

A broader Read it.

It does it.

It does.

And FedEx is almost a verb.

I mean that you know, you.

You, you you you say I'm gonna FedEx it to you even though you may use a different a different carrier.

And so I think you know what?

You You wanna be a verb as a business, right?

You're you're so ubiquitous out there.

But I think that, uh, that I do think it is a bellwether because particularly on the ecommerce side now you have to look at Amazon.

You have to look at at FedEx.

You look at UPS and all of these things, but E commerce continues to grow dramatically as a part of of of our national pastime, which is retail therapy.

Uh, and so I think that we that that FedEx is gonna be a great benefactor of that.

But it's also a great read when you just look at at volume of package.

Yeah, I just want to mention a couple more details from the statement kind of to the themes that we're talking about.

Um, in terms of cost cutting, the company is permanently retiring 22 of its Boeing 7 57 200 aircraft and seven related engines.

It says it's continuing to modernise the fleet, but obviously that also, you know, can help cut some costs.

The other thing that stood out to me is international yields did not perform well, but, um, that US domestic package yields did perform better.

Which kind of speaks to what you're saying here Dryden.

About maybe a little bit of pick up here in US demand.

I mean, the US economy is moving at a little bit different speed than the rest of the world.

And it's and and so we're kind of picking up a little faster, a little stronger, more robust.

I talked about all of the people working.

We've grown.

We've grown France, right?

So I think that in in in that sense, all of this feeds through to a continued greater aggregate demand.

And that means the consumer is gonna shop more.

And if they're shopping more, they're shopping online.

And if you shop it online, it's got to get to your door.

And I think all of those things feed right into this.

And, you know, fuel prices are a big deal.

So if you can retire your inefficient fleet for a more efficient fleet, that's probably gonna help that cost cutting thing we talked about, right?

Yeah, definitely.

All right, Dryden.

Thanks so much.

Appreciate it.

Nice to see you in person.