Method: How AlphaLens works · All modes: 15 frameworks · Same sequence by hand: How to analyze a stock · Background: why general AI gets FDXF wrong
FedEx spun off its less-than-truckload freight business as an independent, NYSE-listed company in mid-2026. The new company, FedEx Freight Holding Company, started life carrying $4.48 billion in debt taken on to fund a cash distribution back to its former parent. Since listing, the stock has fallen from a recorded high of $200.00 to $112.06, a decline of about 44%. Five frameworks below on what the actual filings say about the debt, the earnings trend, and how FDXF compares to its stated less-than-truckload peers, not a recap of the spinoff story itself. For the mechanics of the spinoff and why a frozen AI model gets this ticker wrong, see the companion piece on why general AI breaks on FDXF.
At $112.06 a share and roughly 149.5 million diluted shares (the weighted-average share count stated in the filed recast exhibit), FDXF's implied market capitalization is approximately $16.8 billion.
This is worth flagging directly. FedEx Freight's fiscal-year 10-K, for the year ended May 31, 2026, reports diluted EPS of $4.38, putting the stock at roughly 25.6 times that figure. But the company's own August 2026 8-K also filed a separate calendar-year recast, covering the twelve months ended December 31, 2025, showing diluted EPS of $7.08, a materially different number covering a different twelve-month window. Using that figure instead implies a multiple closer to 15.8 times. Neither figure is wrong. They cover different periods, and which one a given analysis leans on changes the apparent valuation substantially. This report keeps both labeled with their exact period rather than picking one.
For the fiscal year ended May 31, 2026, operating cash flow was $167 million against $379 million of capital expenditures, for free cash flow of negative $212 million. A standard trailing-FCF valuation does not work off this base; any fair value case here has to be built on a forward view of the business, not the trailing twelve months.
These are modeled scenarios, not price targets and not a forecast of what the stock will do.
| Scenario | Key assumption | Basis | Scenario value |
|---|---|---|---|
| Bull | Freight volumes stabilize, the calendar-year 2025 revenue and margin decline (detailed below) does not repeat, and free cash flow turns positive as post-spin capex normalizes | Modeled off the CY2024 income level before the disclosed decline | ~$150–$180/share |
| Base | Revenue and operating income track closer to the CY2025 recast level than CY2024, debt service is manageable but free cash flow stays thin | Modeled off filed FY2026 and CY2025 figures | ~$95–$130/share |
| Bear | Freight demand stays soft, the leverage ratio approaches the covenant's 3.50x step-down threshold, and free cash flow stays negative through another fiscal year | Modeled off the covenant threshold and the negative FY2026 FCF print | ~$55–$80/share |
$3.7 billion of senior unsecured notes (fixed rates from 4.30% to 5.25%, maturing 2029 through 2036) plus a $600 million term loan at 4.91% maturing 2029, for a weighted-average rate of 4.79% on $4.3 billion of long-term debt exclusive of finance leases. No principal comes due in fiscal 2027 or 2028. $1.6 billion is due in fiscal 2029, $1.0 billion in fiscal 2031, and $1.7 billion thereafter. The filing states the fair value of that debt was $4.2 billion against a $4.3 billion carrying value as of May 31, 2026. A $1.2 billion revolving credit facility was undrawn as of the filing date. The credit facilities carry a total leverage ratio covenant of no more than 3.75x through the first seven months after the spinoff, stepping down to 3.50x afterward.
1. Which EPS figure anchors the multiple. As shown above, the fiscal-year and calendar-year filed figures imply meaningfully different multiples. Any valuation on FDXF has to state explicitly which period it is using.
2. Free cash flow has to turn positive. A negative $212 million trailing free cash flow figure means the bull case depends on capex normalizing or revenue recovering, neither of which is guaranteed by anything in this filing.
3. The covenant step-down is a real, dated mechanical event. The leverage ratio ceiling tightens from 3.75x to 3.50x seven months after the spinoff. If earnings continue declining the way the CY2025 recast shows, covenant headroom compresses on a known schedule, not a hypothetical one.
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Try free, card requiredThe August 2026 8-K's recast income statement shows calendar-year revenue of $8,778 million in 2025 against $9,092 million in 2024, a decline of about 3.5%. Operating income fell further, from $1,532 million in 2024 to $1,022 million in 2025, down about 33%. Net income fell from $1,440 million to $1,059 million, down about 26%. Diluted EPS fell from $9.63 to $7.08 on an unchanged 149,505,248 diluted share count across both years.
The filing includes a line item called "Separation and other" in operating expenses: $0 in 2024, $206 million in 2025, concentrated almost entirely in the third and fourth quarters of 2025 ($30 million, then $176 million). This is the filer's own label, and unlike a routine non-GAAP adjustment, it reads as a genuine one-time cost tied to the separation process itself. Backing that $206 million out of 2025 operating income gives $1,228 million, still down about 20% from 2024's $1,532 million. The decline is real even after removing the labeled one-time item, not explained away by it.
For the fiscal year ended May 31, 2026, operating cash flow was $167 million against $379 million of capital expenditures. This is not a case of earnings outrunning cash in the usual accrual-quality sense; it's a business spending more on capital equipment than it generated from operations in this period, a fact this report treats as a business characteristic to watch rather than an accrual red flag, since LTL freight is a capital-intensive model.
The cash and cash equivalents balance is not available from this data source. Segment-level revenue breakdown, if any exists below the single reported LTL business, is not in this payload. Recurring versus one-time classification beyond the "Separation and other" line the filer itself labeled is not stated.
| Factor | Sensitivity | Evidence in this payload |
|---|---|---|
| Interest rates | Medium | $3.7 billion of the debt is fixed-rate (4.30% to 5.25%), largely insulating interest expense from rate moves, but the $600 million term loan and the undrawn $1.2 billion revolver are both benchmark-rate-based per the filed terms, so a real variable-rate slice exists alongside the fixed-rate majority. |
| Inflation | Not addressed in this payload | No fuel surcharge, wage inflation, or price realization discussion is in the retrieved filing text. |
| Dollar / FX | Not addressed in this payload | No international revenue or currency exposure is disclosed in the retrieved recast income statement or debt footnote. |
| Industrial demand / freight cycle | High | The filing's own recast numbers already show it: revenue down about 3.5% and operating income down about 33% from calendar 2024 to calendar 2025, before any forward-looking macro assumption is even applied. |
| Sector rotation | Not addressed in this payload | Equity factor or sector-rotation dynamics are not something a company filing discloses; no evidence either way is in this payload. |
The clearest macro signal here does not require a forecast. It is already sitting in the company's own recast financials: an LTL freight carrier whose revenue and operating income both declined year over year before the spinoff even closed, which is consistent with a softening industrial shipment environment rather than anything specific to the separation itself.
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Try free, card requiredFDXF's peer set is the less-than-truckload segment of the freight industry: Old Dominion Freight Line (ODFL), Saia (SAIA), and XPO's LTL business. Every figure in the table below was pulled live from each company's own SEC filings on the same date as FDXF's figures. The periods are not identical, FDXF's revenue and net income below cover its full fiscal year ended May 31, 2026, while the three peers report a single quarter (ended June 30, 2026); this report keeps that period difference labeled rather than treating the dollar figures as directly comparable. Margin percentages, which are ratios within each company's own reporting period, are the fairest like-for-like comparison here.
| Company | Period | Revenue | Net margin | Total debt | Debt / total assets |
|---|---|---|---|---|---|
| FDXF | FY, ended 5/31/26 | $8.79B | 7.5% | $4.48B | 65.1% |
| Old Dominion (ODFL) | Q2, ended 6/30/26 | $1.55B | 22.6% | $0.02B | 0.4% |
| Saia (SAIA) | Q2, ended 6/30/26 | $0.96B | 9.9% | $0.10B | 2.7% |
| XPO (XPO) | Q2, ended 6/30/26 | $2.36B | 6.9% | $3.29B | 39.5% |
On net margin and balance-sheet leverage, the two figures this framework can honestly compare across different-period filings, FDXF sits at the weak end of its own stated peer set. Old Dominion is nearly debt-free and posts a net margin roughly three times FDXF's. Saia and XPO sit in between. FDXF's 65.1% debt-to-assets ratio is the highest of the four by a wide margin, a direct, disclosed consequence of the $4.1 billion cash distribution it funded with new borrowing at spinoff. This is a structural starting-point difference, not a claim about which business is executing better operationally; a newly separated company with fresh acquisition debt and a legacy, low-leverage competitor are not starting from the same balance sheet.
| Dimension | Rating | Evidence |
|---|---|---|
| Cost advantage / scale | Weak, evidenced | FDXF's 7.5% net margin against Old Dominion's 22.6% and Saia's 9.9%, on the revenue and income figures pulled above. |
| Balance sheet flexibility | Weak, evidenced | 65.1% debt-to-assets against Old Dominion's 0.4% and Saia's 2.7%, leaving FDXF the least room to absorb a downturn without covenant pressure. |
| Pricing power | Not in this payload | No customer contract terms, pricing data, or rate-per-shipment figures are in the retrieved filing text for FDXF or its peers. |
| Switching costs / customer stickiness | Not in this payload | No customer concentration or contract-length disclosure is in this payload. |
| Barriers to entry | Not in this payload | Industry-wide terminal network and fleet capital requirements are a structural feature of LTL freight generally, but no specific figures for FDXF are in this payload. |
On the two dimensions this payload actually supports, FDXF starts its life as a standalone company at a real cost and leverage disadvantage to its two smaller, less indebted LTL peers, and roughly comparable to XPO's leverage profile. Whether that gap narrows depends on execution this filing cannot yet show, since FDXF has no standalone track record before this fiscal year.
FDXF has no track record as an independent company predating this fiscal year, and the data available to grade it reflects that directly.
| Category | Grade | Basis |
|---|---|---|
| Guidance accuracy | Incomplete | No prior standalone guidance exists to check against actual results. |
| Compensation alignment | Incomplete | No DEF 14A proxy statement is on file yet for this issuer, so pay-versus-performance disclosure is not available. |
| Insider ownership alignment | Incomplete | No SC 13D or SC 13G filings were found against this issuer in the live ownership feed as of the data-pulled date. |
| Capital allocation, debt structuring | Documented, not graded | Management arranged a $3.7 billion fixed-rate note stack laddered across four maturities (2029, 2031, 2033, 2036) plus a smaller variable-rate term loan, with no principal due in the first two fiscal years. That is a real, disclosed structural choice; this report describes it rather than assigning it a letter grade, since there is no track record yet to judge whether it was the right call. |
The one filed fact that speaks to execution quality so far is the "Separation and other" cost line covered in the Earnings Quality section above: $206 million in calendar 2025, concentrated in the back half of the year as the spinoff neared completion. Whether that figure represents disciplined, well-scoped separation costs or overruns is not something this payload can determine without a stated budget or plan to compare it against.
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Start Free →More analyses: MRVL 2026 · SNDK 2026 · SPCX 2026 · all sample reports
Frameworks: Fair Value Stress Test, Earnings Quality Analyzer, Macro Sensitivity Analysis, Competitor Moat Comparison, and Management Quality Scorecard. Background on the spinoff itself: why general AI breaks on FDXF. More: all sample reports · how the research works.