Despite a decline in package volumes, FedEx Corporation’s FDX shares have outperformed the Zacks Transportation—Air Freight and Cargo industry, rising 2.7% in 2025. The company implemented cost-cutting measures to offset revenue pressure. FedEx reported better-than-expected Q2 results, raised its fiscal 2026 outlook, and plans to spin off its Freight unit.

FedEx Corporation is aggressively cutting costs under the DRIVE initiative, resulting in double-digit year-over-year earnings growth. The company achieved $1.8 billion in savings in fiscal 2024 and $2.2 billion in fiscal 2025. FDX plans to achieve $1 billion in transformation-related savings in fiscal 2026, including through the DRIVE program and Network2.0.

FDX’s Freight division revenue fell 2% in the first half of fiscal 2026, prompting the company to announce plans to spin off the unit into a standalone company. The separation is expected to be completed on June 1, 2026, with both entities pursuing independent growth strategies while maintaining service levels.

Despite shareholder-friendly initiatives like dividend increases and share buybacks, FDX faces near-term challenges from tariffs. The company’s strong brand and network position it well for long-term cash flow generation. However, uncertainties surrounding the planned spin-off of the Freight division suggest caution in buying FDX stock at present.

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Read more at Nasdaq: How Should Investors Approach FDX Stock in the New Year?