FedEx Earnings Are an Economic Barometer as War Threatens Growth

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(Bloomberg) — FedEx Corp. opened 2026 on a tear, as the stock raced ahead on rosy views of the US economy. But with the war in Iran threatening to crimp growth, the delivery giant’s earnings report after the bell on Thursday represents a test of Wall Street’s faith in economic resilience.

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The company’s shares soared to a fresh intraday record on Feb. 27, capping a 36% jump to start the year, placing them among the 25 best performers in the S&P 500 Index. But since then, they’ve fallen about 10%, putting them among the index’s bottom 30%, as investors’ concerns about the impact of the war and surging oil prices overwhelm hopes for lower interest rates and higher tax refunds driving consumer purchases.

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“The prevailing assumption prior to the breakout of war was for accelerating economic growth this year,” said Gina Martin Adams, chief market strategist at HB Wealth Management.

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FedEx is typically seen as an economic bellwether because its success depends on the flow of goods across the US and the world. So its earnings often carry implications for more than just the parcel carrier alone. In particular, industrial and materials stocks, which boomed through the first two months of the year but have cooled considerably since the US and Israel launched their bombing campaigns and Iran shut down most traffic in the Strait of Hormuz, will likely take cues from this report. 

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The company is expected to report a 6% increase in quarterly revenue to $23.5 billion and a more than 7% decline in adjusted earnings per share to $4.17. Since FedEx’s fiscal third quarter ran through Feb. 28, the day the war began, the results will paint a picture of the economy leading up to the shock. 

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“If they had good momentum going into this, then I think investors would look at this and say, okay, well we had a good foundation,” said Keith Lerner, chief investment officer at Truist Advisory Services. 

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Beyond that, investors will likely be looking for clues on whether economic activity is slowing as the fighting continues, disruptions worsen and consumers spend more on gas and energy. Comments on FedEx’s outlook during the earnings call may offer “some early understanding as to how the last two weeks of energy price action is or is not changing behavior,” Martin Adams said.

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Investors have relatively high expectations based on the stock’s performance. FedEx’s rally has given it a market capitalization of roughly $82 billion, which puts it slightly ahead of rival United Parcel Service Inc. for the first time. The shares are trading for almost 16 times earnings over the next 12 months, above its 10-year average of 13. The multiple climbed over 18 late last month to a five-year high.  

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Valuations are even higher for the industrial heavyweights that will get a read-through from this report. The S&P 500 Industrials Index trades at roughly 25 times forward earnings, far higher than its decade-average of less than 20 and topping the S&P 500’s multiple, which is below 21. The market is pricing in an “industrial renaissance,” and FedEx and its peers have to confirm that can still happen despite the war, Martin Adams said.