FedEx — Company Overview and Fundamentals FedEx is a global transportation and logistics company operating capital‑intensive parcel and freight networks, with a balance sheet characterized by very low reported leverage ( debt-to-equity 0.0813 ) and recurring cash generation that exceeds accounting earnings. Financial Highlights and Growth Metrics The company shows several positive fundamentals: bo
FedEx is a global transportation and logistics company operating capital‑intensive parcel and freight networks, with a balance sheet characterized by very low reported leverage (debt-to-equity 0.0813) and recurring cash generation that exceeds accounting earnings.
The company shows several positive fundamentals: book value per share has compounded at a 5‑year CAGR of 6.28%, and diluted EPS grew at a 3‑year CAGR of 14.44%, reflecting per‑share recovery (latest diluted EPS $18.78 and revenue per share $385.05) as reported in the EPS Diluted & Revenue per Share card. Operating cash flow on a trailing‑twelve‑month basis of $8.18B materially exceeds trailing net income of $4.48B, and the average cash conversion ratio sits at 1.9252, indicating cash generation that reliably outpaces reported profits (see Earnings Quality Analysis).
Notable areas of concern include compressed and uneven margins: the most recent net profit margin is 4.9%, gross margin is 6.3% and the latest operating margin was reported at -1.2%, which points to cost or timing pressures in operating results (see Profit Margin Trends). Quarterly net income has been volatile—ranging from \$824.0M to \$1.65B over the past year—even as quarterly revenue moved from \$22.16B to \$24.00B, so top‑line growth (revenue per share growth of 4.7% over the past year) has been more modest than EPS improvement (1‑year EPS growth 14.4%), implying leverage to margin dynamics rather than broad-based volume gains (refer to Revenue & Net Income and Revenue & EPS Growth).
The foundation of business quality and long-term value creation
FEDEX CORP's quarterly revenue has stepped up into the low-$20B range over the past several years, rising from roughly $17–18B in 2018–2019 to sustained mid‑$20B levels more recently. In the most recent five quarters revenue progressed from $22.16B (period ending 2025-02-28) to $22.22B (2025-05-31), $22.24B (2025-08-31), $23.47B (2025-11-30) and $24.00B (2026-02-28), approaching the prior peak of $24.39B recorded in 2022-05-31.
Net income has been more variable quarter-to-quarter, with notable higher results in the March-quarter periods (for example $1.65B in 2025-05-31 and $1.47B in 2024-05-31) and a deep trough of -$334M in 2020-05-31. Over the most recent year net income moved from $909.0M (2025-02-28) to $1.65B (2025-05-31), then to $824.0M (2025-08-31), $956.0M (2025-11-30) and $1.06B (2026-02-28), reflecting quarter-to-quarter variability with a recovery to just over $1.0B in the latest period. The most recent quarterly revenue was $24.00B and the most recent quarterly net income was $1.06B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Mar 2025 to Feb 2026
Revenue composition by disclosure category for the latest period
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Analyzing long-term margin stability and competitive positioning
FEDEX CORP’s trailing twelve-month net profit margin has been relatively stable in recent quarters, trading in a narrow band around 4.4%—5.0%. After a low point of 1.9% in mid‑2020, the margin climbed to a 6.2% high in mid‑2021 and then moderated, showing minor quarter-to-quarter movement; the last few quarters read 4.5%—4.9%, with the most recent observation at 4.9%.
Understanding Profit Margins
Between Mar 2025 and Feb 2026, Fedex Corp converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Across the full series, FEDEX CORP's trailing-twelve-month operating cash flow consistently exceeds trailing-twelve-month net income. Operating cash flow generally remains in the high single-digit billions, while net income stays in the low single-digit billions.
Over multi-year periods, operating cash flow reached higher peaks — above $9B to $10B in earlier years — and has since moderated into a narrower band around $7B to $8B. Conversely, net income has been steadier at various points in the range of $3.9B to $5.1B.
Focusing on the most recent four reported TTM points:
The most recent trailing twelve-month values are:
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
FEDEX CORP's trailing-twelve-month ROE shows a clear short-term recovery after a sharp trough. ROE fell to 6.0% in the quarter ending 2025-02-28, then rebounded to 14.6% by 2025-05-31 and has remained in the mid-teens across the subsequent quarters (14.8% on 2025-08-31, 15.4% on 2025-11-30, 15.0% on 2026-02-28).
Over the multi-year series the metric has been volatile, with earlier peaks above 20% in 2020–2021 and 2017–2018 and prior troughs below 10% in several 2019–2020 and 2015 quarters. The most recent level of 15.0% is within the mid-teens range observed in many recent quarters and below those earlier peak levels. The most recent return on equity (ROE) was 15.0%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
FEDEX CORP's operating cash flow (TTM) shows a mid-cycle dip around 2024 when the TTM value fell to approximately $6.81B (2024-11-30) after higher levels near $9–10B in 2021–2023, then recovered through 2025 into early 2026. Over the most recent year the TTM operating cash flow rose from $7.04B (2025-05-31) to $7.57B (2025-08-31) and then to $8.20B (2025-11-30), holding near $8.18B in the latest period (2026-02-28).
Investing cash flow (TTM) has been consistently negative across the series, with a gradual reduction in outflows from larger negatives in 2021–2023 (around -$6B to -$7B) toward smaller outflows in 2024–2026. The TTM investing outflow moved from about -$4.09B (2025-05-31) to -$3.97B (2025-11-30) and -$3.87B most recently (2026-02-28).
Financing cash flow (TTM) was negative for many quarters, reflecting net cash used in financing through 2021–2025, but shows an inflection in the latest reported period: after a series of negative TTM values (e.g., -$4.02B on 2025-05-31, -$3.51B on 2025-08-31, -$2.80B on 2025-11-30), the TTM financing cash flow turned positive to $2.03B as of 2026-02-28.
The most recent trailing twelve-month values are: Operating Cash Flow (TTM) $8.18B, Investing Cash Flow (TTM) -$3.87B, Financing Cash Flow (TTM) $2.03B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
FEDEX CORP's trailing twelve-month price-to-earnings ratio has been variable over the past two years. It rose from 13.5x in the quarter ending to 18.2x by , then contracted through mid-2025 to a trough around 12.7x (). After that trough, the PE recovered to 15.0x in and then accelerated to 20.6x in the most recent quarter (), marking a notable inflection upward.
Over the longer history, the ratio has shown wider swings, including multi-year peaks above 20x (for example 39.9x on and 29.4x on ) and troughs below 10x (7.9x on )). The most recent price-to-earnings (PE) ratio was 20.6x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.