FedEx Corp. (NYSE:FDX)

The analysis of the financial data reveals several trends regarding profitability, cost of capital, invested capital, and economic profit over the six-year period.

Net Operating Profit After Taxes (NOPAT)

NOPAT displayed a significant increase from 2,531 million USD in 2020 to a peak of 7,163 million USD in 2021, indicating improved operating efficiency or profitability in that year. Following this peak, NOPAT declined to 5,014 million USD in 2022 and then showed moderate fluctuations, with values slightly above 5,000 million USD for the subsequent years, indicating stabilization but not a return to the 2021 peak levels.

Cost of Capital

The cost of capital steadily increased from 10.25% in 2020 to a high of 12.32% in 2024, before declining marginally to 11.34% in 2025. This upward trend signifies rising costs associated with financing or increased risk perception over the analyzed period, with a slight easing in the final year.

Invested Capital

Invested capital exhibited consistent growth, rising from 57,553 million USD in 2020 to 70,379 million USD in 2025. The gradual increase each year suggests ongoing investment in assets or expansion of the company's operational base, potentially to support growth or maintain competitive positioning.

Economic Profit

Economic profit remained negative throughout the period, indicating that the company did not generate value above its cost of capital. There was an improvement from -3,371 million USD in 2020 to -588 million USD in 2021, which correlates with the increase in NOPAT that year. However, from 2022 onward, economic profit declined again, worsening to approximately -3,067 million USD by 2025. This recurring negative economic profit suggests challenges in creating shareholder value when considering the cost of invested capital.

Overall, while the company experienced a temporary surge in net operating profitability in 2021, this was not sustained in subsequent years. The rise in the cost of capital combined with growing invested capital contributed to persistent negative economic profits, reflecting difficulties in achieving returns exceeding capital costs over the medium term.

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 analysis of the annual financial data reveals notable trends in economic profit, invested capital, and economic spread ratio over the six-year period ending May 31, 2025. These indicators together provide insight into the company's financial performance and capital efficiency.

Economic Profit

The economic profit has been consistently negative throughout the period, indicating that the company has not generated returns exceeding its cost of capital. Starting from a substantially negative value in 2020 at -$3,371 million, there was an improvement in 2021 to -$588 million, suggesting a temporary alleviation of economic losses. However, this improvement was not sustained, with economic profit declining again to -$2,456 million in 2022 and further fluctuating in subsequent years, reaching -$3,067 million in 2025. The general pattern demonstrates persistent economic underperformance with considerable volatility.

Invested Capital

The invested capital shows a steady upward trend from $57,553 million in 2020 to $70,379 million in 2025. This consistent increase implies ongoing investment and asset accumulation by the company. The growth in invested capital averages around 3-4% annually, reflecting sustained capital commitment even as economic profits remain negative. This rising capital base, coupled with negative economic profits, points to challenges in generating sufficient returns on new and existing investments.

Economic Spread Ratio

The economic spread ratio, representing the difference between the return on invested capital and the cost of capital, remains negative throughout the period. It starts at -5.86% in 2020, improving significantly to -0.92% in 2021, aligning with the temporary improvement in economic profit. Nevertheless, the ratio deteriorates again to -3.7% in 2022 and maintains negative values through 2025, ending at -4.36%. The persistent negative spread indicates the company’s returns on investment have consistently been below its capital costs, which aligns with the observed negative economic profit.

Revenue Trends

The revenue exhibited a general upward trend from May 31, 2020, to May 31, 2022, increasing from approximately 69.2 billion US dollars to 93.5 billion US dollars. However, after peaking in 2022, revenue declined slightly in subsequent years, falling to around 87.7 billion US dollars by May 31, 2024, and remaining relatively stable through May 31, 2025.

Economic Profit Analysis

The company reported negative economic profit throughout the entire period, indicating that it did not generate returns above its cost of capital in any year. Despite a significant improvement in 2021, where the loss narrowed to approximately 588 million US dollars from a larger deficit of 3.4 billion US dollars in 2020, economic profit deteriorated again in the following years. Losses deepened in 2022, reaching about 2.46 billion US dollars, and remained substantially negative thereafter, with minor fluctuations.

Economic Profit Margin Dynamics

The economic profit margin mirrored the economic profit trend, remaining negative throughout the period. The margin improved markedly in 2021, reaching -0.7%, its least negative point. After 2021, the margin worsened, declining to -4.22% in 2024 before a slight recovery to -3.49% in 2025. This pattern suggests ongoing challenges in generating economic value relative to revenue.

Overall Insights

While revenue growth was notable until 2022, the inability to translate this growth into positive economic profit highlights operational or capital cost pressures. The temporary improvement in 2021 may reflect favorable conditions or cost management, but the subsequent negative trend indicates sustained difficulties in value creation beyond the cost of capital. The stabilization of revenue in recent years combined with persistent negative economic profit suggests that focus on improving profitability or cost efficiency is critical for enhancing shareholder value.