FedEx’s review of its freight business could unlock significant value, says BMO Capital Markets analyst Fadi Chamoun, in a research note. FedEx on Tuesday said management and the board are conducting an assessment of FedEx Freight and potential steps to further unlock shareholder value. The division is the largest less-than-truckload business and has an operating ratio of 80% that is second only to Old Dominion Freight Line. Chamoun says that given FedEx has historically traded at 8.5x EV/EBITDA and that peers including Saia and XPO Logistics, which have higher operating ratios, trade in the low to mid-teens, they expect a significant re-rating of valuation higher should FedEx Freight trade as a standalone company or be sold. Shares jump 15% to $293.98, boosted in part by modest improvement in 4Q revenue that reversed six straight quarters of declines.

The following is a summary of the FedEx Corporation (FDX) Q4 2024 Earnings Call Transcript: Financial Performance: FedEx reported year-over-year operating profit growth and margin expansion in every quarter of FY 2024. Achieved a target of less than 6.5% capital intensity a year early, reflecting lower CapEx and higher free cash flow, resulting in nearly $4 billion returned to stockholders. Improved return on invested capital and achieved full-year earnings near the upper end of guidance, up 19% year-over-year on an adjusted basis, despite a revenue decline. Business Progress: Continued rollout of Network 2.0 and finalized the transition to ‘One FedEx’ for efficiency and reduced costs. Advanced DRIVE initiatives, achieving $1.8 billion in structural cost savings in FY 2024. Targeting $4 billion of savings in FY 2025 compared to FY 2023 baseline with plans for another $2 billion from Network 2.0. Opportunities: Potential for enhanced profitability and market presence in Europe

FedEx (FDX) reported fiscal Q4 non-GAAP earnings late Tuesday of $5.41 per diluted share, up from $4.94 a year earlier. Analysts polled by Capital IQ expected $5.37. Revenue in the quarter ended May 31 rose to $22.1 billion from $21.9 billion a year earlier. Analysts surveyed by Capital IQ expected $22.06 billion. The company expects non-GAAP adjusted fiscal 2025 earnings of $20 to $22 a diluted share. Analysts surveyed by Capital IQ expect $21.14 normalized. FedEx expects low- to mid-single-digit percentage growth in fiscal 2025 revenue. Analysts polled by Capital IQ expect $90.5 billion. Shares of the company jumped 15% in recent after-hours activity.

FedEx said revenue rose in its fiscal fourth quarter and guided for a slight recovery in revenue in the current year amid a review of its freight business. Shares jump 16% to $297 in after-hours trading. The stock has dropped 11% over the past three months. The Memphis, Tenn.-based package-shipping company on Tuesday said its profit for the three months ended May 31 fell to $1.47 billion, or $5.94 a share, from $1.54 billion, or $6.05 a share, for the same period a year earlier. Stripping out one-time items, earnings per share came in at $5.41. Analysts polled by FactSet has forecast adjusted earnings per share of $5.34. Revenue rose 0.9% to $22.1 billion, slightly ahead of analysts expectations of $22.04 billion, according to FactSet. “We expect this momentum to continue in fiscal 2025 as we advance our efforts to create the world’s most flexible, efficient, and intelligent network,” Chief

FedEx’s review of its freight business comes as the company also reviews its air network capacity to better align air network capacity with demand. FedEx is permanently closing several facilities to match capacity with demand and conducting the assessment of FedEx freight to determine the role that it plays in its overall portfolio structure. The review is expected to deliver results by the end of the year. Investors will want to see the expenses that will come with the freight assessment. In its fiscal 4Q, FedEx said that its results included a noncash imparment charge of $157 million from the decision to permanently retire 22 Boeing 757-200 aircraft and seven related engines. Shares jump 15% in after-hours trading.

FedEx (FDX) shares jumped in late trading Tuesday after the company reported a modest improvement in quarterly revenue, reversing six straight quarters of declines. The shipping giant said it still faces a challenging market for parcel deliveries but added that it benefitted from savings due to restructuring efforts that include multiple rounds of workforce reductions and facility closures. Earlier this month, FedEx said it is reducing its headcount in Europe by as many as 2,000 people. Shares rose 14.05% to $292.4 in post-market trading. — The Memphis, Tenn.-based company said revenue rose to $22.1 billion in the quarter, from $21.93 billion a year earlier, slightly exceeding the $22.04 billion expected by analysts polled by FactSet. For the fiscal year, revenue reached $87.7 billion, down from the $90.2 billion a year earlier. — The company said it logged $157 million in charges linked to a decision to retire 22 aircraft and seven

FedEx says it’s seeing improving trends in U.S. domestic parcel and international export demand. The company’s preparing to put in place additional efficiencies with its contract with the U.S. postal service is set to expires on Sept. 29, but it still expects to benefit from a moderately improving demand environment. Overall for FY25, FedEx expects low-to mid-single digit growth in revenue. In FY24, the company saw a drop in revenue of about 2.8%.Shares jump 15% to $295 in after-hours trading.