FedEx Corporation (FDX): what the price requires
At today's price, FedEx Corporation (FDX) is priced for +1.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/FDX
Headline
| Field | Value |
|---|---|
| Ticker | FDX |
| Company | FedEx Corporation |
| Current price | $313.29/sh |
| Composition | Federal Express - U.S. priority revenue 12% / Federal Express - U.S. deferred revenue 6% / Federal Express - U.S. ground revenue 39% / Federal Express - International priority (export) 10% / Federal Express - International economy (export) 7% / Federal Express - International domestic 5% / Federal Express - Freight U.S. 2% / Federal Express - Freight International priority 3% / Federal Express - Freight International economy 2% / Federal Express - Other 1% / FedEx Freight segment 10% / Other and eliminations 4% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.6% |
| Operating margin today | 5.7% |
| Margin compression implied | -3.1pp |
| Implied growth | 1.1% |
| Multiple paid | 21x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.3pp (computed at the 7% minimum rate; the CAPM rate 6.9% sits below it).
Reconcile: at the x-ray's 9.3% required return this reads ~17.7%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.29σ |
| cohort percentile (of 225 peers) | 46 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.52x | 5 | expensive |
| Earnings | 2.45x | 5 | expensive |
| Relative | 0.84x | 5 | justifies |
| Growth | 0.99x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $393.08 | 0.80x | yes | FCF base $4.4B, growth 5% (input: historical growth), terminal g 4.0%, WACC 7.5%, 6yr projection |
| DCF Exit Multiple | Growth | $315.54 | 0.99x | yes | Exit EV/EBITDA: 8.6x / 10.6x / 12.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $362.57 | 0.86x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.1x / 18.0x / 20.9x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $202.83 | 1.54x | yes | BV/sh $124.70, ROE (TTM) 15.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $255.60 | 1.23x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $236.63 | 1.32x | yes | Rev $91.9B, growth 5% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 0.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $276.96 | 1.13x | yes | EPS $15.08, growth 18% (input: historical EPS growth), PEG=0.91 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $127.94 | 2.45x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $5.57B × (1−16%) / WACC 7.5% → EPV (no growth) |
| Residual Income | Asset | $262.11 | 1.20x | yes | BV $124.70 + 5yr PV of (ROE (TTM) 15.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $205.73 | 1.52x | yes | √(22.5 × EPS $15.08 × BVPS $124.70) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $371.62 | 0.84x | yes | EBITDA $10.03B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $65.53 | 4.78x | yes | FCF $4371.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $57.66 | 5.43x | yes | SBC-adj FCF $4.20B (FCF $4.37B − SBC $0.17B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $486.73 | 0.64x | yes | EPS $15.08 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $30.54 | 10.26x | yes | BV $124.70 × (ROIC 1.8% / WACC 7.5%) |
| P/Sales Sector | Relative | $961.64 | 0.33x | yes | Revenue $91.93B × sector P/S 2.5x |
| PEG Fair Value | Relative | $415.44 | 0.75x | yes | EPS $15.08 × (PEG 1.5 × growth 18.4% (input: historical EPS growth)) → PE 27.5x |
| Earnings Yield | Earnings | $163.08 | 1.92x | yes | EPS $15.08 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $17.2b |
| Net debt / NOPAT (after-tax) | 3.96x |
| Net debt / operating income (pre-tax) | 3.31x |
| Share count CAGR (buyback) | -2.5% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
FedEx is valued on a segment basis anchored to the Federal Express Segment; at $326.25 the price implies an operating decline of about 4.4% a year for that segment, and the reverse-DCF band of about $326 to $726 places the price at the floor, so the market is pricing in decline.
The capital-allocation story is the bull case: FedEx completed the FedEx Freight spin-off on June 1, 2026 (retaining a 19.9% stake to monetize), exceeded $1 billion of fiscal 2026 transformation savings on top of the prior $4 billion DRIVE target, and continues buybacks; relative-multiple and growth-DCF frames justify the price while earnings-power says expensive.
The risk is moat erosion and leverage: Amazon insourced its deliveries, the parcel market is competitive and softening, fiscal 2026 EPS guidance of $16.90 to $18.10 fell short of the Street's roughly $19.86, and net debt near $17.2 billion (about 3x operating income) bites in a downturn.
Bull Case
FedEx's capital allocation tells you where management thinks the value is, and the recent moves are decisive. On June 1, 2026, the company completed the spin-off of FedEx Freight into a separate public company (FDXF), distributing one FDXF share for every two FedEx shares and retaining a 19.9% stake it plans to monetize over the following two years. Splitting out the less-cyclical, higher-margin freight business is a clear statement: management is sharpening the parent into a focused express-and-ground network whose value the market can price on its own, and the retained stake plus its planned monetization is a built-in source of capital. Alongside that, the company has bought back stock and reduced share count (down about 2.5% a year), returning capital while it restructures.
The other half of the capital story is the cost-out program, and it is delivering. FedEx exceeded its goal of $1 billion of transformation-related cost savings in fiscal 2026, on top of the DRIVE program that previously hit its $4 billion target. For a network business with enormous fixed costs in aircraft, trucks, and sortation, structural cost reduction is the most reliable lever to expand margin without depending on volume, and the fiscal 2026 result of $6.61 billion in adjusted operating income at a 7% margin on $94.7 billion of revenue shows the program flowing through. Self-help of this magnitude is what lets a mature logistics operator grow earnings even in a soft freight environment.
The valuation makes the setup attractive. At $326.25 (June 27, 2026) the price implies operating growth of about minus 4.4% a year for the segment carrying the premium, the Federal Express Segment; the market is pricing in decline. The bull wager is that a focused, post-spin FedEx, executing a proven cost program and returning capital, is worth more than a decline-priced multiple implies, and that the freight separation plus the retained-stake monetization unlocks value the conglomerate structure obscured.
Bear Case
The moat FedEx long relied on, a dense, hard-to-replicate parcel network, is being chipped at from both ends, and the data shows the erosion. At the top, the company's largest historical customer, Amazon, has spent years building its own logistics arm and now delivers the bulk of its own packages, removing a volume base FedEx used to count on. At the bottom, the U.S. Postal Service, regional carriers, and UPS all compete on the same lanes, and e-commerce shippers increasingly mix carriers to drive down rates. A network business loses its advantage when volume fragments, because the fixed-cost density that made it efficient gets spread over fewer packages. That is why the parent has had to lean so hard on cost-cutting: the revenue side is structurally pressured.
The valuation reflects the strain. The price implies an operating decline of about 4.4% a year for the Federal Express Segment, and while the relative-multiple and growth-DCF families reach the price, the earnings-power family says the stock is expensive. That earnings-power flag is the bear's foothold: it says that on its current, normalized earning power, FedEx is not cheap, and the bull case depends on the cost program and the spin-off unlocking value rather than on the core business growing. The fiscal 2026 EPS guidance of $16.90 to $18.10 came in well below the Street's roughly $19.86 expectation, and the stock fell on the outlook even after a strong quarter, which tells you the market is skeptical the self-help offsets the demand softness.
The structural cautions are heavy. Net debt sits near $17.2 billion against an asset-intensive, fuel-and-labor-exposed cost base, and net-debt-to-operating-income around 3x means the leverage bites in a downturn. The spin-off itself carries one-time costs (FedEx Freight's own guidance flagged spinoff costs weighing on results) and removes the more stable freight earnings from the parent, leaving FDX more exposed to the cyclical, competitive express-and-ground business. The DRIVE and transformation programs have largely been harvested, so the easy cost savings are behind it, and continued margin gains get harder from here. The bear's summary: a network whose volume moat is eroding, priced for decline yet flagged expensive on earnings power, carrying meaningful leverage into a softer, more competitive parcel market.
Valuation
FedEx is valued on a segment basis, anchored to the Federal Express Segment, which carries the priced-in premium. At $326.25 the price implies operating growth of about minus 4.4% a year for that segment over five years at a 7.2% cost of capital; the market is pricing in a modest decline, which the inversion reads as within range, with the segment's multiple in the upper half of its peer range.
The method families split in a familiar pattern. The relative-multiple and growth-DCF families justify the price, while the earnings-power family says expensive. The bull leans on the peer and forward frames, which credit the cost program and the value-unlock from the freight spin-off; the bear leans on the earnings-power frame, which says FedEx is not cheap on its current normalized earning power. The decline embedded in the price is the swing factor: if the express segment merely stabilizes, the growth and peer frames look right; if it keeps eroding, the earnings frame does.
The honest read: this is a restructuring story priced for decline, where the bet is on self-help and corporate simplification rather than organic growth. The strengths are concrete: $1 billion of fiscal 2026 transformation savings on top of the prior $4 billion DRIVE target, the completed FedEx Freight spin-off plus a 19.9% retained stake to monetize, and steady buybacks. The risks are a softening, more competitive parcel market and net debt near $17.2 billion. One important note on the inputs: the underlying segment composition still reflects the pre-spin structure, so post-June-2026 the parent is a more focused express-and-ground business, and the cleaner anchor for the price is management's fiscal 2026 EPS guidance of $16.90 to $18.10 and the post-spin margin path rather than the legacy combined figures.
Catalysts
The defining recent catalyst was the FedEx Freight spin-off, completed June 1, 2026. FedEx distributed one share of FedEx Freight (FDXF) for every two FedEx shares (record date May 15) and retained a 19.9% stake it plans to monetize over the following 24 months. The separation leaves the parent as a more focused express-and-ground network and gives the freight business its own listing (FedEx 8-K, TradingKey, TheStreet).
The fiscal 2026 results and guidance were the other catalyst. FedEx reported $94.7 billion in revenue and $6.61 billion in adjusted operating income at a 7% margin, and exceeded its goal of $1 billion in transformation-related cost savings for the year, on top of the DRIVE program's prior $4 billion. However, fiscal 2026 EPS guidance of $16.90 to $18.10 came in well below the Street's average of about $19.86, and shares fell on the outlook despite the strong quarter (TT, Yahoo Finance, TradingKey).
The forward catalysts are the post-spin operating trajectory and the parcel-demand backdrop. The thesis turns on whether the focused parent sustains margin gains as the transformation savings are harvested, how it monetizes the retained FDXF stake, and whether express and ground volumes hold against competition and a softer freight cycle. Continued cost execution and a stabilizing volume picture would support the case that the decline-priced stock is mispriced; weaker volumes, spinoff-related costs, or another guidance miss would be the clearest near-term risks. The next quarterly print is the first clean look at the standalone parent (TheStreet, TT).
Peer Cohorts (Per Segment, With Filing Citations)
Federal Express Segment (reported)
- UPS (United Parcel Service, Inc)
- (no filing in the citation store)
- ODFL (OLD DOMINION FREIGHT LINE, INC.)
- (no filing in the citation store)
- SAIA (Saia, Inc.)
- (no filing in the citation store)
- XPO (XPO, Inc.)
- (no filing in the citation store)
- EXPD (EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.)
- (no filing in the citation store)
- CHRW (C.H. ROBINSON WORLDWIDE, INC.)
- (no filing in the citation store)
FedEx Freight Segment (reported)
- ODFL (OLD DOMINION FREIGHT LINE, INC.)
- (no filing in the citation store)
- SAIA (Saia, Inc.)
- (no filing in the citation store)
- XPO (XPO, Inc.)
- (no filing in the citation store)
- ARCB (ARCBEST CORPORATION)
- (no filing in the citation store)
- KNX (Knight-Swift Transportation Holdings Inc.)
- (no filing in the citation store)
- WERN (WERNER ENTERPRISES, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.