FDX - A Noisy Buying Opportunity

Research evidence excerpt

FDX - A Noisy Buying Opportunity

June 23, 2026

Investment Conclusion

Prior to its report after the close on Tuesday, FDX’s stock is up 36% YTD, materially outperforming UPS (+7%), DHL

(+9%), our WR Transport Index (+29%) and the S&P 500 (+8%). Since the spin was effective on June 1, FDX's stock

is down 4% MTD, modestly lagging UPS (-1%), DHL (flat), our Transport Index (-1%) and the S&P 500 (-3%). FDX

stock traded down another 6% following its report with its small beat and noisy guidance.

Big picture, FDX and UPS have both struggled to sustain positive yield trends, and thus margins for both parcel

companies have faced material pressure over the past decade. But for the past several quarters, we're seeing FDX

start to sustain a better mix of volume and yield growth at the same time. As shown in Exhibit 1, this is just the 3rd

year since F01 with positive trends in Express volumes, Express yields, Ground volumes, and Ground yields all at

once. As a result, FDX reported its best Domestic Express revenue growth (ex. COVID) in F26 in the last 15 years. FDX

seems to be gaining share and seeing improving pricing at the same time. While volume comps will get tougher going

forward, the underlying demand backdrop has improved with ISM now back above 50 for the past 5 months. We also

believe FDX can sustain positive price-cost trends going forward, particularly with cost reduction opportunities again

next year with Network 2.0 and Europe cost savings. At the same, large offsetting headwinds like incentive comp

should moderate significantly in 2H:26 and C27. Thus, we believe FDX should increasingly show strong operating

leverage going forward with a rare trifecta of volumes, pricing and productivity gains.

Exhibit 1 - FDX Domestic Volume and Pricing Trends