FedEx Corp. (NYSE:FDX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibited notable fluctuations over the analyzed period. Beginning at 2,531 million USD in 2020, it surged significantly to 7,163 million USD in 2021, representing a strong recovery or operational improvement. However, the subsequent years showed a declining trend, with values decreasing to 5,014 million USD in 2022, then slightly increasing to 5,421 million USD in 2023, followed again by declines to 4,954 million USD in 2024 and 4,913 million USD in 2025. This pattern suggests volatility in operating performance or changes in operational efficiency.

Cost of Capital

The cost of capital rose from 10.25% in 2020 to a peak of 12.31% in 2024, indicating a steadily increasing expense of financing or an elevated risk perception by investors. In 2025, this rate moderated slightly to 11.33%, though it remained above the initial levels. This upward trend could suggest tightening financial conditions or changes in the company’s risk profile.

Invested Capital

Invested capital demonstrated a consistent upward trajectory from 57,553 million USD in 2020 to 70,379 million USD in 2025. The increases each year were moderate but steady, indicating ongoing investments in fixed assets, working capital, or other long-term resources. This steady growth in capital base may reflect strategic capacity expansion or sustained asset accumulation.

Economic Profit

Economic profit remained negative throughout the period, starting at -3,366 million USD in 2020. It improved somewhat to -582 million USD in 2021, coinciding with the peak in NOPAT, yet thereafter deteriorated again, falling to -2,450 million USD in 2022 and further declining with smaller fluctuations to -3,061 million USD in 2025. The persistent negative economic profit indicates that returns did not cover the cost of invested capital, pointing to value destruction despite operational profits.

Overall Analysis

The company experienced significant volatility in operational profitability while steadily increasing its invested capital base. Despite improvements in NOPAT in 2021, the inability to sustain those high profit levels coupled with a rising cost of capital led to continuous negative economic profit outcomes. These trends suggest challenges in generating returns above capital costs and highlight potential areas for strategic reassessment in investment efficiency and cost management.

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.

Economic Profit

The economic profit demonstrated considerable fluctuations over the observed periods. Initially, there was a significant improvement from a loss of 3,366 million USD to a loss of 582 million USD between May 2020 and May 2021. However, this was followed by a deterioration in the subsequent years, with losses increasing again to 2,450 million USD in May 2022 and peaking near 3,695 million USD in May 2024. The figure slightly improved to a loss of 3,061 million USD in May 2025, but the overall trend indicates persistent negative economic profit throughout the period.

Invested Capital

The invested capital showed a consistent upward trend across the years. It rose steadily from 57,553 million USD in May 2020 to 70,379 million USD in May 2025. This growth reflects continuous capital deployment in the business, with moderate year-on-year increases, indicating expansion or reinvestment strategies.

Economic Spread Ratio

The economic spread ratio remained negative throughout the entire timeframe, indicating that the returns on invested capital were below the cost of capital. The ratio improved sharply from -5.85% in May 2020 to -0.91% in May 2021, but then deteriorated consistently thereafter, reaching -5.26% in May 2024 before a slight recovery to -4.35% in May 2025. This persistent negative spread highlights ongoing challenges in generating adequate returns given the invested capital.

The data presented outlines key financial metrics over a six-year period, focusing on economic profit, revenue, and economic profit margin.

Revenue Trends

Revenue experienced a consistent upward trend from 2020 to 2022, increasing from approximately $69.2 billion to $93.5 billion. However, this was followed by a decline in 2023 to $90.2 billion and a further decrease in 2024 to $87.7 billion. In 2025, revenue showed stabilization with a slight increase to $87.9 billion.

Economic Profit Dynamics

Economic profit remained negative throughout the period, indicating that the company did not generate value beyond its cost of capital in any given year. In 2020, the economic loss was substantial at approximately -$3.37 billion. This loss narrowed significantly in 2021 to -$582 million, reflecting improved operational efficiency or capital use during that year. However, economic profit deteriorated again in subsequent years, with losses deepening to -$2.45 billion in 2022, followed by further declines in 2023 and 2024, reaching nearly -$3.7 billion. In 2025, while still negative, the economic loss narrowed slightly to -$3.06 billion.

Economic Profit Margin Evaluation

The economic profit margin, reflecting economic profit relative to revenue, mirrors the trends observed in absolute economic profit. It improved markedly from -4.86% in 2020 to a much smaller negative margin of -0.69% in 2021, implying better profitability relative to revenue at that time. Following this improvement, the margin deteriorated over the next years, decreasing to -2.62% in 2022 and further into negative territory at -4.21% in 2024. In 2025, the margin showed slight improvement but remained significantly negative at -3.48%.

Overall Analysis

The company's revenue growth initially suggested strong performance, peaking in 2022. However, despite high revenue figures, economic profitability was not achieved in any year, indicating that the cost of capital and other expenses exceeded operating returns. The best economic profit and margin performances occurred in 2021, corresponding with a marked reduction in loss. Subsequently, the company encountered increasing economic losses even as revenue somewhat stabilized or declined slightly. This indicates challenges in managing costs or capital efficiency despite generating significant revenue volumes, highlighting the need for a strategic focus on improving economic profitability.