Parcel and cargo delivery company FedEx (FDX) has had a bumpy ride this year. A shaky global backdrop, marked by constantly shifting U.S. tariff policies and escalating geopolitical tensions, has only added to the pressure. However, the challenges began long before that, with FedEx struggling through three years of weak shipping demand as customers tightened their budgets amid rising costs. 

In response, FedEx has been trimming expenses and pursuing billions in cost savings. Still, FDX stock hasn’t been spared. Shares are deep in the red for the year, reflecting investor concerns around weak volumes and ongoing macro pressures. And yet, investors just got a small reason to be optimistic. 

Earlier this month, FedEx approved a 5% bump to the annual dividend, lifting it to $5.80 per share for fiscal 2026 and marking the fifth consecutive year of dividend increases. CFO John Dietrich believes this boost reflects the company’s ongoing commitment to shareholder value through a balanced approach to dividends, buybacks, and investment. But with the stock still under pressure, is a dividend boost enough to get investors back on board?

About FedEx Stock

FedEx runs a global logistics network spanning transportation, e-commerce, and business services. With a workforce of over 500,000, the company leans on efficiency, flexibility, and a tech-driven approach to meet the needs of businesses and consumers alike. FedEx is also aiming to reduce its environmental footprint, with a target of achieving carbon-neutral operations by 2040.

With a market capitalization of roughly $55 billion, shares of this logistics network company have struggled this year, with FDX stock down 21% year-to-date (YTD). For comparison, the broader S&P 500 Index ($SPX) has returned approximately 3.6% YTD. That highlights the extent to which FDX has underperformed. 

With the stock in a slump, FedEx is beginning to stand out as a deep-value play. It’s currently trading at just 12 times forward earnings and 0.61 times sales, significantly below sector medians. These discounted valuations hint that the market may be overlooking FedEx’s long-term potential amid near-term challenges.

Alongside its 5% dividend hike for fiscal 2026, FedEx also declared a quarterly payout of $1.45 per share, set to be distributed on July 8. With a forward annualized dividend of $5.80 per share, the stock now offers a yield of 3.04%. That's a compelling figure for income-focused investors, especially given the company’s track record of boosting shareholder returns.

FedEx’s Q4 Earnings Snapshot

FedEx unveiled its fiscal 2025 fourth-quarter earnings report on June 24, shattering Wall Street’s expectations on both the top and bottom lines. Revenue came in at $22.2 billion, up slightly year-over-year (YOY) and edging past the $21.7 billion forecast. Meanwhile, adjusted EPS climbed 12.2% YOY to $6.07, beating estimates of $5.93. 

A key driver behind the strong performance was the company’s ongoing success with DRIVE, an ambitious transformation initiative launched in fiscal 2023 and aimed at boosting long-term profitability. The program focuses on optimizing operations across its transportation segments, slashing overhead and support costs, and enhancing digital capabilities. Notably, FedEx credited DRIVE for helping it deliver $2.2 billion in structural cost savings in fiscal 2025 alone.

Alongside raising the dividend, FedEx is doubling down on shareholder returns with a strong buyback strategy. In fiscal 2025, the company returned a sizable $4.3 billion to investors through a combination of $3 billion in share repurchases and $1.3 billion in dividends.

Looking ahead to fiscal 2026, FedEx is setting a cautious yet strategic tone. For Q1, the company expects flat to 2% revenue growth, while adjusted EPS is projected to land between $3.40 and $4.00. For the full year, FedEx aims to unlock $1 billion in permanent cost savings through its DRIVE and Network 2.0 transformation initiatives. The company also plans to reduce pension contributions to as much as $600 million, down from $800 million in fiscal 2025, while allocating $4.5 billion in capital spending toward network upgrades, fleet modernization, and automation to further streamline operations.

What Do Analysts Expect for FedEx Stock? 

Evercore ISI recently lowered its price target on FedEx to $259 from $276 but maintained an “Outperform” rating, citing macroeconomic headwinds such as weakening retail sales, industrial production, and uncertainty surrounding China's exports and tariffs. On the other hand, Citi analyst Ariel Rosa remains bullish on FedEx stock, reaffirming her “Buy” rating and $267 price target on June 18. The analyst recently highlighted the company’s strategic overhaul — including the Network 2.0 integration, the planned Freight spin-off, and ongoing cost cuts under its DRIVE program — as key steps toward enhancing efficiency and long-term earnings. Despite near-term headwinds, Rosa sees these moves as setting the stage for a stronger, more focused FedEx.

Overall, Wall Street isn’t giving up on FedEx just yet. Analysts maintain a “Moderate Buy” consensus, reflecting cautious optimism despite FDX stock’s recent struggles. Of the 30 analysts offering recommendations, 19 offer a "Strong Buy" rating, one suggests a “Moderate Buy,” eight give shares a “Hold,” and two advocate for a "Strong Sell" rating. 

FDX stock’s average analyst price target of $275.86 indicates upside potential of 24% from current price levels. The most optimistic call on the Street sees shares climbing to $354, which would mark a powerful 59% rally from current levels.