FedEx Stokes Investors With Hint of a Freight Deal
The delivery company is exploring a sale or spinoff of its less-than-truckload unit, which would create a lot of shareholder value but dilute profit margins.
Getting out of the freight business?
Photographer: Charly Triballeau/AFP/Getty Images
FedEx Corp. dropped a bomb on the market Tuesday afternoon with the announcement that it will do an “assessment” of its freight unit. Investors seemed to like the move, pushing up the shares as much as 15%, on the possibility of a windfall and a more pure-play package delivery and logistics company. A deal could make a lot of sense.
Certainly, the company’s fiscal fourth-quarter earnings report contained other good news: a 2025 fiscal year earnings-per-share outlook at the midpoint of $21, beating analysts’ midpoint estimate of $20.85; cost cuts of $2.2 billion; and share buybacks of $2.5 billion for the year ending May 31. This is all more proof that Raj Subramaniam is executing well on the transformation plan that he laid out soon after taking over as chief executive officer in June 2022 from founder Fred Smith.