FedEx Corp. (NYSE:FDX)

The analysis reveals a consistent pattern of negative economic profit over the observed period. While net operating profit after taxes (NOPAT) fluctuated, it was consistently insufficient to cover the cost of capital employed, resulting in value destruction rather than value creation.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a substantial increase from 2020 to 2021, rising from US$2,531 million to US$7,163 million. However, this was followed by a decline in 2022 to US$5,014 million, and a modest increase to US$5,421 million in 2023. A slight decrease to US$4,954 million is observed in 2024, followed by a further decrease to US$4,913 million in 2025. This suggests a peak in profitability in 2021, with subsequent stabilization at a lower level.

Cost of Capital

The cost of capital increased from 11.81% in 2020 to 14.01% in 2021, coinciding with the rise in NOPAT. It then decreased to 13.01% in 2022, before increasing again to 13.59% in 2023 and peaking at 14.29% in 2024. A slight decrease to 13.10% is noted in 2025. The fluctuations in the cost of capital likely reflect changes in market conditions and the company’s risk profile.

Invested Capital

Invested capital demonstrated a consistent upward trend throughout the period, increasing from US$57,553 million in 2020 to US$70,379 million in 2025. This indicates ongoing investment in the business, despite the negative economic profit.

Economic Profit

Economic profit remained negative across all years examined. The magnitude of the loss varied, with the least negative result in 2021 at -US$1,834 million. The largest losses occurred in 2024 and 2025, reaching -US$5,084 million and -US$4,304 million respectively. The increasing negative economic profit in later years, despite relatively stable NOPAT, suggests that the cost of capital is becoming a more significant factor, or that invested capital is growing at a rate that outpaces profit generation. The trend indicates a widening gap between the return generated from invested capital and the minimum acceptable return required by investors.

In summary, the company consistently failed to generate returns exceeding its cost of capital during the analyzed timeframe. While NOPAT showed initial improvement, it was not sustained, and the increasing invested capital, coupled with fluctuating but generally elevated cost of capital, contributed to a worsening economic profit position in the later years.

Net Income

The net income exhibits a significant increase from 2020 to 2021, rising from 1,286 million US dollars to 5,231 million US dollars. Following this peak, there is a decline in 2022 to 3,826 million US dollars. The values then show a modest upward movement in 2023 and 2024, reaching 4,331 million US dollars, before dipping slightly to 4,092 million US dollars in 2025. This pattern suggests a period of volatility with an initial strong recovery followed by a stabilization phase with minor fluctuations.

Net Operating Profit After Taxes (NOPAT)

NOPAT follows a somewhat parallel trend to net income but with less volatility. It increases notably from 2,531 million US dollars in 2020 to a peak of 7,163 million US dollars in 2021. A decline is observed in 2022 to 5,014 million US dollars, after which it gradually decreases to 4,913 million US dollars by 2025. The downward trend in the last few years indicates some pressure on the core operating profitability despite the initial strong gain.

Provision for Income Taxes

The provision for income taxes shows a notable increase from 383 million USD in 2020 to a peak of 1,443 million USD in 2021, representing a substantial rise. This is followed by a decrease to 1,070 million USD in 2022. Subsequently, the provision increases again to 1,391 million USD in 2023, then slightly rises to 1,505 million USD in 2024, before declining to 1,349 million USD in 2025. The trend indicates volatility with overall growth compared to the initial year, suggesting fluctuating taxable income or changes in tax planning strategies over the period.

Cash Operating Taxes

Cash operating taxes have generally trended upward over the six-year period. Starting at 259 million USD in 2020, the figures increase sharply to 893 million USD in 2021 and continue to rise to 983 million USD in 2022. The upward trajectory continues through 2023 with 1,177 million USD and reaches the highest value of 1,885 million USD in 2024. In 2025, there is a decline to 1,626 million USD. The overall increase suggests higher actual tax payments, which might correlate with increased operating profits or altered tax compliance and payment profiles.

Comparison and Insights

Comparing the two items, cash operating taxes generally rise more consistently than the provision for income taxes, which shows more fluctuations. The significant jump in cash taxes from 2023 to 2024, contrasting with a steady rise in provision in the same period, might indicate timing differences or changes in tax payment schedules. The decline in both provision and cash taxes in 2025 could indicate a reduction in taxable income or enhanced tax efficiency measures.

The financial data over the six-year period presents several noteworthy trends in key capital structure metrics.

Total reported debt & leases

This metric shows a gradual increase from 36,121 million USD in 2020 to a peak of 38,332 million USD in 2023, followed by a slight decrease to 37,416 million USD in 2025. This pattern suggests a strategy of moderate leveraging with a plateauing effect in recent years, potentially reflecting cautious debt management or repayment activities after 2023.

Common stockholders’ investment

There is a consistent and significant upward trajectory in common stockholders’ equity, rising from 18,295 million USD in 2020 to 28,074 million USD in 2025. This increase indicates steady growth in the equity base, possibly driven by retained earnings accumulation or issuance of new stock, thereby strengthening the company’s capital foundation over time.

Invested capital

Invested capital demonstrates a steady upward trend from 57,553 million USD in 2020 to 70,379 million USD in 2025. The growth in invested capital parallels the increase in equity and debt levels, showing expansion in total capital employed by the business. The slower growth rate after 2023 suggests a stabilization in capital investment or asset base expansion.

Overall, the data indicates a balanced growth approach with incremental increases in both debt and equity financing contributing to a higher invested capital base. The stability in debt levels post-2023, combined with continuous growth in shareholders’ equity, may reflect strategic financial management aimed at optimizing capital structure and funding sustainable growth.

The financial performance, as indicated by economic value added metrics, demonstrates a consistent pattern of negative economic profit over the observed period. While invested capital has generally increased, the economic spread ratio reveals a concerning trend in profitability relative to that capital.

Economic Profit

Economic profit consistently registers as negative across all reported years, ranging from a low of -5,084 US$ millions in 2023 to a high of -1,834 US$ millions in 2021. The magnitude of the loss appears to be increasing in recent years, with 2023 and 2024 showing the largest negative values. A slight decrease in the absolute value of the loss is observed between 2024 and 2025, but it remains substantially negative.

Invested Capital

Invested capital exhibits a generally upward trajectory, increasing from 57,553 US$ millions in 2020 to 70,379 US$ millions in 2025. The rate of increase slows over time, with the smallest increment occurring between 2024 and 2025. This suggests continued investment in the business, despite the consistent negative economic profit.

Economic Spread Ratio

The economic spread ratio consistently shows negative values, indicating that the company’s return on invested capital is less than its cost of capital. The ratio demonstrates a worsening trend from -7.41% in 2020 to -7.24% in 2024. A modest improvement is noted in 2025, with the ratio increasing to -6.12%. However, the ratio remains negative, signifying continued value destruction. The consistent negativity and recent decline suggest increasing difficulty in generating returns sufficient to cover the cost of capital.

In summary, the company consistently fails to generate economic profit, and the economic spread ratio indicates a deteriorating trend in profitability relative to invested capital. While invested capital continues to grow, the inability to achieve a positive economic spread raises concerns about the efficiency of capital allocation and the long-term sustainability of the business model.

The financial performance, as indicated by economic profit and its margin, demonstrates a consistent pattern of negative economic profit over the analyzed period spanning from 2020 to 2025. While revenue generally increased through 2022, the economic profit margin remained negative and exhibited a worsening trend, particularly in the later years.

Economic Profit

Economic profit consistently registered as negative values throughout the period. Initial values in 2020 were approximately -4,264 US$ million, improving to -1,834 US$ million in 2021. However, economic profit deteriorated again, reaching -3,633 US$ million in 2022 and -4,032 US$ million in 2023. The most recent years, 2024 and 2025, show further decline to -5,084 US$ million and -4,304 US$ million respectively. This suggests that the company’s cost of capital consistently exceeded the returns generated from its operations.

Revenue

Revenue experienced growth from 2020 to 2022, increasing from 69,217 US$ million to 93,512 US$ million. However, revenue then decreased in 2023 and 2024, settling at 90,155 US$ million and 87,693 US$ million respectively. A slight increase is observed in 2025, with revenue reaching 87,926 US$ million, but it does not recover to the levels seen in 2022.

Economic Profit Margin

The economic profit margin consistently remained negative throughout the period, indicating that the company did not generate returns exceeding its cost of capital. The margin began at -6.16% in 2020, improved to -2.18% in 2021, but then worsened steadily. By 2024, the margin reached -5.80%, and in 2025 it was -4.89%. The increasing negative trend suggests a growing disparity between the cost of capital and the economic profits generated, despite revenue fluctuations. The margin’s movement does not directly correlate with revenue changes, indicating that factors beyond revenue, such as cost of capital or operational efficiency, are significantly impacting economic profitability.

In summary, while revenue demonstrated initial growth, the consistent negative economic profit and its worsening margin suggest underlying challenges in generating returns that cover the cost of capital. The recent trend indicates a potential need for strategic adjustments to improve profitability and economic value creation.