"US economic barometer" FedEx Corporation (FDX.US) operating profit increased by 31%, raises performance outlook.

The FedEx Corporation (FDX.US), known as the "barometer of the U.S. economy", unexpectedly raised the lower end of its full-year profit and sales outlook range, indicating that its efforts to reduce costs and streamline its logistics and delivery network are yielding positive results as the U.S. domestic demand continues to improve. Analysts and investors have long viewed FedEx Corporation as a "barometer/weather vane/economic pendulum" of the U.S. and global economy, so the stronger-than-expected performance and future outlook of FedEx Corporation undoubtedly highlight the increasing probability of the U.S. economy achieving a so-called "Goldilocks-style soft landing" in 2026. The global express delivery company, in a performance statement on Thursday local time, stated that its adjusted earnings per share range for the current fiscal year (2026 fiscal year) would be $17.80 to $19, raising the lower end of the previous profit forecast. The midpoint of this range is higher than the average analyst expectation of $18.28 per share. In terms of the latest sales expectations, FedEx Corporation currently expects a 5% to 6% growth in sales for the current fiscal year, raising the lower end of the previous forecast range (previously forecasted range was 4% to 6%), a forecast that is also stronger than the average analyst expectation of about 4% sales growth. FedEx Corporation is undergoing a major restructuring of its delivery network, merging its traditionally independent ground and air freight systems. The more optimistic outlook and significantly better-than-expected profits for the second quarter of fiscal year 2026 indicate that the company's various restructuring measures are having positive effects as demand for delivery of goods in the United States is improving after a long period of weakness following the COVID-19 pandemic. Investors have embraced this strategy the company's management expects the strategy to result in $1 billion in permanent cost savings in the 2026 calendar year. In the past six months leading up to Wednesday's closing of the U.S. stock market, FedEx Corporation's stock price has risen by about 26%, while the stock price of its competitor United Parcel Service Inc. (UPS) has risen by less than 2%. In its performance statement, the company stated that strong pricing trends, ongoing cost reduction measures, and continued growth in domestic parcel volumes have boosted FedEx Corporation's core transportation business. Financial data shows that FedEx Corporation's adjusted earnings per share for the second quarter ended November 30 were $4.82, significantly higher than the $4.05 in the same period last year and also higher than the average analyst expectation of about $4.12. In other performance indicators, FedEx Corporation's total sales for the second quarter were approximately $23.5 billion, a 7% year-on-year increase, strengthening the average analyst expectation of about $22.9 billion; the second-quarter operating profit under GAAP for FedEx Corporation was approximately $1.378 billion, a significant increase of about 31% surpassing expectations; GAAP net profit was approximately $956 million, a substantial increase of 29% year-on-year. The second quarter often marks the start of the holiday shopping shipping season, during which express delivery companies traditionally experience a surge in volume. Therefore, FedEx Corporation's performance during this period and its outlook for future performance are key indicators of prolonged support for the U.S. economic growth whether consumer spending is robust or not. It is worth noting that both UPS and FedEx Corporation have been affected by the grounding of all MD-11 aircraft. Statistics show that the MD-11 is a mainstay aircraft for global air cargo carriers; in November, a UPS plane crashed near the Hub Group, Inc. Class A facility in Louisville, Kentucky, resulting in 14 deaths. The aircraft type accounts for 4% of FedEx Corporation's transport fleet, which undoubtedly exacerbates concerns about potential disruptions to peak shipping services, but actual growth data proves that the company has taken active measures to minimize the negative impact of the MD-11 grounding in a strong-demand environment. The company has been working to overcome operational difficulties caused by the downturn in transport demand after the COVID-19 pandemic, which was further exacerbated earlier this year mainly due to the inconsistent tariff policies of U.S. President Donald Trump in his second term causing disruptions in global shipping routes. Barometer of the U.S. Economy Because FedEx Corporation's overall business covers the retail, consumer, and industrial sectors, this express delivery company is often seen as the "barometer of the U.S. economy" for measuring broader economic growth. As an important player in international express and air cargo transportation, FedEx Corporation's volume and profit data changes in cross-border e-commerce, international exports, and key routes (such as the China-U.S. critical transport route) are often used to observe changes in global trade sentiment and supply chain rhythms. FedEx Corporation's network services span retail, consumer, and industrial sectors, and changes in orders, shipments, and inventory replenishment activities quickly reflect on parcel volumes, cargo volumes, and service structures; therefore, market trends often interpret its operational data as high-frequency signals of the "hot and cold" of the real economy. Wall Street financial giant Goldman Sachs Group, Inc. has repeatedly described FedEx Corporation and UPS as the "barometer of the actual health of the U.S. economy", emphasizing their sensitivity to changes in manufacturing output and industrial sentiment (a weakening in manufacturing often suppresses high-profit B2B volumes and urgent service demands). FedEx Corporation stated that due to the persistence of this volatility, adjusted operating profit will suffer a $1 billion impact from tariff policies, mainly because freight volumes from China to the U.S. have been reduced due to tariff pressures led by the Trump administration this highly profitable shipping channel is the first to bear the negative impact of these tax measures. Goldilocks-style Soft Landing The strong performance growth and improved performance outlook by FedEx Corporation undoubtedly provide a strong boost to the narrative of the "Goldilocks-style soft landing of the U.S. economy in 2026". For the second quarter of fiscal year 2026, FedEx Corporation reported an adjusted EPS of $4.82, sales increasing to $23.5 billion, and raising the sales growth forecast for fiscal year 2026 to 5%-6%, while also raising the lower end of the adjusted EPS range to $17.80-19. These growth and forecast adjustments usually indicate a more stable performance in demand, price (yields), and network efficiency in retail/e-commerce and some corporate shipping scenarios, consistent with evidence of "continued economic expansion without overheating". Wall Street financial giant Morgan Stanley recently released a research report stating that the OBBBA (the so-called "big and beautiful" bill) passed by the Trump administration in 2025 would strongly drive economic growth starting in 2026. Combined with the temporary inflationary disturbances caused by the price increases due to the Trump tariff policies gradually dissipating until short-term inflation gradually subsides, and the rapid progress of AI data center construction focused on AI computational infrastructure such as Alphabet Inc. Class C and other technology giants will collectively drive the U.S. economy towards a "Goldilocks-style soft landing" in 2026, displaying a mild growth macroeconomic environment. As a result, Morgan Stanley defines 2026 as a "broad-based stock market bull market under a rolling recovery", advocating a return of market risk preferences from "point to surface" and a resonance-driven upward trend in multiple cyclical industries. The economic data for 2025 released before the U.S. government shutdown actually shows a Goldilocks-like outlook, with multiple consumer spending indicators rising from January to August 2025, in line with expected PCE curves and GDP upgrades. This combination of economic data has indeed increased the subjective probability of the Goldilocks macroeconomic scenario: namely, moderate growth, mild inflation, and a market expectation of a more "leaning towards rate cuts" lower interest rate trajectory. The so-called "Goldilocks" style U.S. macroeconomic environment refers to the U.S. economy being neither too hot nor too cold, just right, maintaining moderate "gentle growth" in GDP and consumer spending along with a long-term stable "mild inflation trend", while benchmark interest rates are on a downward trajectory. Overall, Morgan Stanley expects the U.S. economy to gradually move out of a highly uncertain state in 2026 and return to a positive trajectory of "moderate growth". Morgan Stanley stated that 2025 was a year of tariff policies, tightening immigration, and the Trump administration-led tax cuts and fiscal policies of the OBBBA implementation, and analysts expect that from 2026 to 2027, the key frameworks of various policies stimulating economic growth will be largely settled, shifting the focus of the U.S. economy from "policy disturbances" to how businesses and households adjust spending in the context of the tax cuts under the OBBBA and the stimulus to boost consumer confidence led by the Trump administration. (end of translation)