FedEx forecasts 11% revenue growth, shares fall on margin concerns

FedEx said it expects revenue to grow about 11% in fiscal 2026 and projected earnings per share of $16.90 to $18.10, but investors focused on softer margins and sent the stock down about 6% in extended trading. The company beat profit estimates in its latest quarter, yet Federal Express operating margin fell to 7.7% from 8.4% a year earlier as employee salaries and benefits, outsourced transportation and fuel costs climbed.

The market reaction showed how closely FedEx is being read as a gauge of shipping demand, pricing power and operating stress across the broader economy. After completing the spin-off of FedEx Freight on June 1, the company is more concentrated in its core parcel-delivery business, and Wall Street is now watching whether management can lift profits by leaning harder into higher-margin services such as temperature-controlled medicine delivery while holding down network and labor costs. Chief Financial Officer Claude Russ told analysts that margins should improve as compensation-related burdens decline, but that view was offset by concern about weaker demand conditions and pricing pressure.

Trade policy is still clouding the outlook. Global tariffs imposed by President Donald Trump have weakened demand for delivery services at FedEx and UPS, and shifting U.S. trade rules continue to complicate forecasting. FedEx also changed its fiscal year structure this cycle, making year-over-year comparisons harder to read even as the company tries to show that revenue growth can hold up in a slower freight environment.

For investors, the latest quarter suggested that pricing gains can still support top-line growth, but the margin drop signaled that labor, fuel and transportation costs are absorbing too much of the benefit. With FedEx Freight gone, the company’s remaining network has to prove it can turn a stronger revenue forecast into durable profit expansion, not just a bigger sales figure.