Parcel and cargo delivery company FedEx (NYSE: FDX) beat Wall Street’s revenue expectations in calendar Q3 2026 (fiscal Q1 2027), with revenue up 2.7% year on year to $22.86 billion. Its non-GAAP profit of $3.74 per share was 3.2% above analysts’ consensus estimates.

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Revenue growth

A company’s long-term revenue performance is one signal of its overall quality. Any business can deliver a good quarter or two, but many enduring ones grow for years. Over the last five years, FedEx grew its revenue at a sluggish 1.9% compounded annual growth rate, falling short of our standards.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. FedEx’s annualized revenue growth of 4.3% over the last two years is above its five-year trend, a positive sign.

This quarter, FedEx reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s consensus estimates by 7.3%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, according to S&P, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.

Operating margin

FedEx was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.3% was weak for an industrials business. That outcome is unsurprising given its low gross margin baseline.

On the positive side, FedEx’s operating margin rose by 1.6 percentage points over the last five years, as its revenue growth provided operating leverage.

In Q3, FedEx generated an operating margin of 4.7%, down 1.4 percentage points year on year. By contrast, its revenue and gross margin rose, suggesting it was less efficient as operating expenses such as marketing, R&D and administrative overhead grew faster than revenue.

Earnings per share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

FedEx’s weak 2.6% annual EPS growth over the last five years aligns with its revenue performance. On the positive side, this indicates its incremental revenue was profitable.

As with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

FedEx’s two-year annual EPS growth of 9.2% was decent and topped its 4.3% two-year revenue growth.

A closer look at FedEx’s earnings helps explain its performance. A two-year view shows that FedEx has repurchased its stock, shrinking its share count by 3.2%. Its EPS therefore outperformed revenue because of financial engineering rather than increased operational efficiency, as buybacks boost per share earnings.

In Q3, FedEx reported adjusted EPS of $3.74, down from $3.83 in the same quarter last year. Despite falling year on year, this result beat analysts’ consensus estimates by 3.2%. Over the next 12 months, Wall Street expects FedEx’s full-year EPS to grow 2.4% from $20.12 to $20.60, according to S&P.

Key takeaways from FedEx’s Q3 results

FedEx’s sizable revenue beat and full-year EPS guidance above Wall Street’s consensus estimates were important positives this quarter. Still, the market seemed to be hoping for more: Shares fell 2.8% to $296.40 immediately after the results.

The latest quarter matters when assessing FedEx at its current price, but not nearly as much as longer-term fundamentals and valuation. Read the full research report here (it’s free).