The Split is Done. Now FedEx has to Prove it Was Worth it

For the first time in over two decades, FedEx is a single-focused business. The spin-off of FedEx Freight in June 2026 marks the end of FedEx as a conglomerate and the beginning of a leaner, sharper company built around one thing: moving parcels and express shipments around the world.

This is a strategic reset years in the making. Management has spent the last two years tearing out costs, consolidating networks, and simplifying the business, and the freight separation is the final, defining move. FedEx Freight, now independently listed, paid FedEx a $4.1bn cash dividend on its way out, giving the parent company firepower to reward shareholders and invest in its core network.

Key Financial Metrics

●     Revenue: Q4 came in at $25bn, up 12.6% on last year, with the full year reaching $94.7bn, up 7.7%.

●     Operating Profit: Adjusted operating profit for the quarter was $2.09bn at an 8.4% margin, down from 9.1% the prior year. For the full year, it was $6.61bn at a 7% margin, flat on last year.

●     After-Tax Profit: The quarter delivered $1.60bn, slightly below the $1.65bn earned the same time last year. The full year came in at $4.43bn, up from $4.09bn.

●     Earnings Per Share (EPS): Adjusted EPS for the quarter was $6.31, up 4%, and $20.24 for the full year, up 11.3%.

●     Capital Expenditure: FedEx spent $3.8bn for the year, down 6%, representing just 4% of revenue — the lowest level in the company's history.

●     Cash: The company ended the year with $13.3bn in cash, boosted by the $4.1bn dividend paid by FedEx Freight on its way out.

●     Shareholder Returns: FedEx returned approximately $2.2bn to shareholders through $776m in buybacks and $1.4bn in dividends, with $1.3bn still available under its buyback programme.

Analysis & Outlook 

FedEx shares surged over 74% year to date. The company actually beat earnings estimates, but investors are nervous about how the trucking split changes the financial picture going forward. Management pushed back with a 5% dividend raise and a $1bn share buyback, a sign they believe the stock is worth more.

The stock goes higher if FedEx keeps spending less, cuts more costs from its network overhaul, positions itself to benefit from calmer global trade conditions, and hits its earnings target for the rest of 2026. The risks are costs from the trucking split coming in higher than expected, trade tensions flaring up again, wages and a new pilot contract adding unplanned expenses, and a confusing seven-month transition year making it hard for anyone to see how well the business is really doing.

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** This article was prepared by BROKSTOCK analyst Maboko Seabi