The FedEx story

What drives the business

• FedEx is integrating the historically separate Federal Express and Ground networks through Network 2.0, seeking to consolidate pickup, delivery, facilities, and support systems while aligning costs with shipping demand.
• Its new reportable segments, Express U.S. Domestic and Express International, expose different levels of profitability, with operating margins of 8.1% and 2.3%, respectively, in calendar 2025.
• The Freight separation also supports debt reduction, with approximately $4.1 billion received from FedEx Freight earmarked alongside cash on hand for debt tender offers capped at $4.15 billion.
• The announced $1.4 billion FedEx Supply Chain sale to CMA CGM Group extends the portfolio streamlining, with completion expected in the second half of 2026.
• FedEx expanded its U.S. convenience network to over 15,000 Walgreens and Dollar General stores and introduced services including FedEx Easy Returns, FedEx Tracking+, FedEx Returns+, and FedEx SameDay Local in 2025 and 2026.

What the price assumes

At $289.65, the reverse DCF implies free cash flow after stock pay grows 0.0% a year for ten years, using a 10.2% discount rate.

That compares with growth of 16.9% a year over the last 10 years and the TenQ check's 10.5% bar, which slows the historical record halfway toward 4%.

The Freight separation changes the business behind that historical record, so the comparison does not establish the remaining operations' future cash growth.

Value FDX on your own assumptions

What could change the story

• Network integration could take longer, cost more, or disrupt customers and service providers, while FedEx must also remove shared costs retained after the Freight separation.
• Amazon.com is both a large customer and an expanding delivery competitor, while government-supported international carriers may benefit from lower costs and more favorable operating conditions.
• The 5.8% operating margin trails the TenQ market benchmark of 13.2%, and return on capital employed of 6.8% falls short of the check's 10.0% bar.
• Total debt of $24.0 billion compares with $13.3 billion of cash and short-term investments, while the near-term liquidity check narrowly fails at 1.48 against 1.50.
• Cybersecurity failures or unreliable AI systems could disrupt deliveries and customer relationships as technology becomes more central to operations.

What to watch next

• The next releases will show whether domestic and international margins improve alongside reductions in stranded costs, with $5.1 billion of free cash flow over the last twelve months as a cash-generation reference.
• FedEx expects 255 operating days in calendar 2026 and 254 in calendar 2027 for both Express segments, making daily shipment volume and revenue per package important comparisons.
• Completion of the FedEx Supply Chain transaction in the second half of 2026 and reported debt reductions will show how far the portfolio and balance-sheet changes have progressed.
• The transition period from June 1, 2026 through December 31, 2026 requires comparisons with the recast continuing operations rather than historical results that included FedEx Freight.

Sources

• FedEx's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The FDX stock report, for every figure and check