FedEx stock struggles after major declines amid rising operational costs

In San Francisco, California, on September 18, 2025, FedEx reported its first-quarter earnings, revealing a mixed outlook for the company. The stock, which has experienced a substantial drop of 17% this year, is currently priced at approximately $225 after peaking at $315.59 in May 2021. This decline has been significantly attributed to increased operating costs damaging the company's bottom line. In comparison to broader market metrics, FedEx's financial ratios, including price-to-sales and price-to-earnings, indicate a relatively attractive valuation, though concerns about its operational performance persist. FedEx has seen its revenues fluctuate, with an average decrease of 2.2% over the last three years compared to a 5.3% increase for the S&P 500 index. Despite a marginal growth of 1% in revenues over the past 12 months, lagging performance compared to the market raises questions about the company's ability to recover. The most recent quarter showed a small revenue increase of 2.8%, but this still falls short of the S&P 500 growth of 6.1%. Furthermore, FedEx’s operating income and net income margins are considerably weaker than those of its counterparts in the S&P 500, intensifying scrutiny on its profitability. Additionally, FedEx's financial health reflects a moderate debt level of $38 billion against a market capitalization of $54 billion, yielding a debt-to-equity ratio of 67%. The cash-to-assets ratio stands at 7.0%, aligning with the broader market. This financial framework indicates a degree of stability but also highlights the challenges FedEx faces, particularly regarding its weak profitability and growth potential. The stock's performance during historical downturns, such as the Inflation Shock of 2022 and the COVID-19 pandemic in 2020, illustrates its vulnerability in adverse economic conditions. The stock has underperformed compared to the S&P 500 index during these downturns, accentuating concerns about FedEx's resilience in a fluctuating market. Overall, despite low valuations suggesting that some recovery is priced into the stock, the general sentiment surrounding FedEx's operational capabilities remains cautiously bearish, warranting a critical view of potential investments in the company moving forward.