The shipping giant FedEx announced Thursday it’s boosting its annual profit projections after delivering stronger-than-anticipated third-quarter financial results, powered by robust holiday season package volumes.
The Memphis-headquartered company, which specializes in overnight air delivery services, watched its stock price surge 8% in extended trading hours. Earlier this month, FedEx achieved a milestone by surpassing UPS in total market capitalization for the first time, reaching a valuation of approximately $82.23 billion by Wednesday’s market close.
The delivery company now projects its adjusted earnings for the fiscal year concluding May 31 will fall between $19.30 and $20.10 per share. This represents a significant increase from December’s guidance of $17.80 to $19.00 per share. Wall Street analysts had been expecting annual profits of $18.69 per share, according to LSEG data.
However, FedEx cautioned that its optimistic projections assume no further geopolitical disruptions. The company noted that ongoing conflicts involving the U.S.-Israeli war on Iran have elevated air freight costs and forced flight rerouting, potentially impacting fourth-quarter results. Stifel analysts pointed out that roughly 8% of FedEx’s international export shipments move through regional hubs in affected areas.
The company’s Express division showed marked improvement during the third quarter, benefiting from enhanced pricing on both domestic and international packages, increased U.S. shipping volumes, and continued expense reduction efforts.
Evercore ISI analyst Jonathan Chappell noted the quarterly “results were lifted by much higher yields, but this time much stronger U.S. ground volume also helped the top line.”
“The cost savings from the network reorganization also continue to help expand margins, and all 3 added up to a very surprising beat,” Chappell added.
Despite these gains, FedEx acknowledged that some benefits were diminished by increased employee wages and bonus payments, elevated transportation expenses, global trade policy impacts, and the grounding of its MD-11 aircraft fleet.
For the critical winter holiday period, adjusted earnings reached $5.25 per share, significantly exceeding analyst projections of $4.14 per share. This performance came despite absorbing millions in unexpected replacement costs for trucks and aircraft to compensate for the grounded MD-11 fleet following a fatal UPS crash in November 2025.
The Federal Aviation Administration ordered the grounding of FedEx’s 28 Boeing MD-11 cargo aircraft after the crash that claimed 14 lives, including three pilots. Company leadership previously indicated they anticipate the MD-11 fleet’s return to service by late May.
FedEx also revised its full-year revenue expectations upward, now anticipating growth of 6.0% to 6.5% year-over-year, compared to previous estimates of 5% to 6% growth.
The company continues implementing a comprehensive multi-year transformation plan involving billions in cost reductions, merging its separate Ground and Express delivery services, increasing operational automation, and preparing to spin off its Freight trucking division on June 1.
Quarterly revenue for the period ending February 28 totaled $24 billion, surpassing analyst expectations of $23.43 billion.
