Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
FedEx Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,955 – 14.56% × 78,834 = -6,521
The analysis of the financial performance from May 31, 2021, to May 31, 2026, reveals a consistent failure to generate positive economic profit, indicating that the company has not earned returns sufficient to cover its cost of capital over the observed period.
- Net Operating Profit After Taxes (NOPAT)
- A significant decline in NOPAT is observed between 2021 and 2022, falling from 7,163 million US$ to 5,014 million US$. Following this initial drop, NOPAT remained relatively stagnant, fluctuating within a narrow range between approximately 4,900 million US$ and 5,400 million US$ through 2026. This lack of growth in operating profit suggests a ceiling in operational efficiency or revenue growth during this timeframe.
- Cost of Capital and Invested Capital
- The cost of capital remained volatile but relatively stable, oscillating between a low of 13.68% in 2022 and a high of 15.02% in 2024. Simultaneously, invested capital showed a consistent upward trajectory, increasing from 64,229 million US$ in 2021 to 78,834 million US$ by 2026. The most substantial increase in invested capital occurred between 2025 and 2026, suggesting an expansion of the asset base that did not result in a corresponding increase in NOPAT.
- Economic Profit Trajectory
- Economic profit remained negative throughout the entire period, reflecting a continuous destruction of shareholder value. The deficit widened from -2,302 million US$ in 2021 to a peak loss of -5,603 million US$ in 2024. Although a marginal recovery occurred in 2025, the economic profit declined further to its lowest point of -6,521 million US$ in 2026. The divergence between the rising invested capital and the flat NOPAT is the primary driver of this deteriorating economic profit trend.
In summary, the combination of stagnant operating profits and a growing capital base has led to an increasing gap between the actual returns and the required cost of capital, resulting in a long-term trend of negative economic value added.
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Net Operating Profit after Taxes (NOPAT)
FedEx Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 17,229 × 4.22% = 727
5 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,697 × 21.00% = 356
6 Addition of after taxes interest expense to net income.
7 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 437 × 21.00% = 92
8 Elimination of after taxes investment income.
An analysis of the financial performance between May 2021 and May 2026 reveals a period of initial volatility followed by a phase of relative stabilization in both operating profitability and net earnings.
- Net Operating Profit After Taxes (NOPAT) Trends
- A significant contraction in operating profitability is observed between 2021 and 2022, with NOPAT decreasing from 7,163 million to 5,014 million. Following this decline, NOPAT exhibited a brief recovery to 5,421 million in 2023, before stabilizing within a narrow range between 4,913 million and 4,955 million from 2024 through 2026. This pattern indicates that the peak operating performance achieved in 2021 was not sustained, and the company has since entered a period of stagnant operational profit growth.
- Net Income Trajectory
- Net income followed a downward trajectory similar to NOPAT between 2021 and 2022, falling from 5,231 million to 3,826 million. However, net income demonstrates a more resilient recovery trend in the subsequent years, generally trending upward to reach 4,433 million by 2026, despite a slight decrease in 2025. This suggests a gradual recovery in bottom-line profitability that is more pronounced than the recovery seen in operating profits.
- Analysis of the Variance Between NOPAT and Net Income
- The gap between NOPAT and net income was widest in 2021, reflecting a substantial difference between operational performance and net earnings. In the subsequent years, this variance narrowed significantly. The closer alignment of net income to NOPAT in the later years suggests a reduction in the impact of non-operating items—such as interest expenses or non-operating income—on the final financial result, effectively tightening the relationship between operating efficiency and net profitability.
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Cash Operating Taxes
FedEx Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
A comparative analysis of tax-related expenditures reveals a notable divergence between the provision for income taxes and actual cash operating tax outflows over the six-year period ending May 31, 2026.
- Provision for Income Taxes Trends
- The provision for income taxes exhibited a fluctuating but relatively range-bound pattern. Following a decline to 1,070 million US$ in 2022, the provision increased steadily to a peak of 1,505 million US$ in 2024, before settling at 1,360 million US$ by 2026. This stability suggests that the accounting accruals for income taxes remained consistent relative to the company's reported earnings.
- Cash Operating Taxes Trajectory
- In contrast, cash operating taxes demonstrated a strong upward trajectory. Outflows grew from 893 million US$ in 2021 to 2,170 million US$ in 2026. While a moderate contraction occurred in 2025, where payments dropped to 1,626 million US$, the overall trend reflects a substantial increase in the actual liquidity required to satisfy tax obligations.
- Analysis of Tax Divergence
- A significant shift in the relationship between accounting provisions and cash outflows is evident. In 2021, the provision for income taxes exceeded cash operating taxes by 550 million US$. By 2024, this relationship inverted, with cash operating taxes surpassing the provision by 380 million US$. This gap widened further by 2026, with cash taxes exceeding the provision by 810 million US$. This trend indicates that the actual cash burden for taxes has grown significantly faster than the recognized tax expense, a factor that directly influences the calculation of cash-based economic value added.
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Invested Capital
FedEx Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to common stockholders’ investment.
5 Removal of accumulated other comprehensive income.
Invested capital exhibits a consistent upward trajectory over the analyzed six-year period, rising from 64,229 million US dollars in 2021 to 78,834 million US dollars by 2026. The growth remains steady between 2021 and 2025, followed by a significant acceleration in the final year, representing a total increase of approximately 22.7% over the entire duration.
- Total Reported Debt and Leases
- Debt and lease obligations remained relatively stable from 2021 through 2025, peaking at 38,332 million US dollars in 2023 before experiencing marginal declines in 2024 and 2025. However, a substantial increase is observed in 2026, where the figure rises to 42,943 million US dollars, indicating a sharp expansion in leveraged financing toward the end of the period.
- Common Stockholders’ Investment
- Equity investment demonstrates a continuous and uninterrupted growth pattern. Starting at 24,168 million US dollars in 2021, the value increases every consecutive year, reaching 31,647 million US dollars by 2026. This steady accumulation suggests a consistent increase in retained earnings or additional capital contributions from shareholders.
- Capital Structure Dynamics
- The expansion of invested capital was primarily driven by equity growth during the initial four years, while debt remained stagnant. The surge in total invested capital in 2026 is the result of a simultaneous spike in both debt and equity, suggesting a large-scale capital deployment or strategic investment phase during that fiscal year.
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Cost of Capital
FedEx Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 72,446) | 72,446) | ÷ | 112,089) | = | 0.65 | 0.65 | × | 20.80% | = | 13.45% | ||
| Long-term debt, including current maturities3 | 22,414) | 22,414) | ÷ | 112,089) | = | 0.20 | 0.20 | × | 3.80% × (1 – 21.00%) | = | 0.60% | ||
| Operating lease liability4 | 17,229) | 17,229) | ÷ | 112,089) | = | 0.15 | 0.15 | × | 4.22% × (1 – 21.00%) | = | 0.51% | ||
| Total: | 112,089) | 1.00 | 14.56% | ||||||||||
Based on: 10-K (reporting date: 2026-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 53,250) | 53,250) | ÷ | 87,967) | = | 0.61 | 0.61 | × | 20.80% | = | 12.59% | ||
| Long-term debt, including current maturities3 | 17,880) | 17,880) | ÷ | 87,967) | = | 0.20 | 0.20 | × | 3.50% × (1 – 21.00%) | = | 0.56% | ||
| Operating lease liability4 | 16,837) | 16,837) | ÷ | 87,967) | = | 0.19 | 0.19 | × | 3.98% × (1 – 21.00%) | = | 0.60% | ||
| Total: | 87,967) | 1.00 | 13.76% | ||||||||||
Based on: 10-K (reporting date: 2025-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 74,517) | 74,517) | ÷ | 109,964) | = | 0.68 | 0.68 | × | 20.80% | = | 14.10% | ||
| Long-term debt, including current maturities3 | 17,931) | 17,931) | ÷ | 109,964) | = | 0.16 | 0.16 | × | 3.50% × (1 – 21.00%) | = | 0.45% | ||
| Operating lease liability4 | 17,516) | 17,516) | ÷ | 109,964) | = | 0.16 | 0.16 | × | 3.79% × (1 – 21.00%) | = | 0.48% | ||
| Total: | 109,964) | 1.00 | 15.02% | ||||||||||
Based on: 10-K (reporting date: 2024-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 63,985) | 63,985) | ÷ | 100,038) | = | 0.64 | 0.64 | × | 20.80% | = | 13.31% | ||
| Long-term debt, including current maturities3 | 18,300) | 18,300) | ÷ | 100,038) | = | 0.18 | 0.18 | × | 3.50% × (1 – 21.00%) | = | 0.51% | ||
| Operating lease liability4 | 17,753) | 17,753) | ÷ | 100,038) | = | 0.18 | 0.18 | × | 3.42% × (1 – 21.00%) | = | 0.48% | ||
| Total: | 100,038) | 1.00 | 14.29% | ||||||||||
Based on: 10-K (reporting date: 2023-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 56,641) | 56,641) | ÷ | 92,839) | = | 0.61 | 0.61 | × | 20.80% | = | 12.69% | ||
| Long-term debt, including current maturities3 | 19,268) | 19,268) | ÷ | 92,839) | = | 0.21 | 0.21 | × | 3.50% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 16,930) | 16,930) | ÷ | 92,839) | = | 0.18 | 0.18 | × | 2.85% × (1 – 21.00%) | = | 0.41% | ||
| Total: | 92,839) | 1.00 | 13.68% | ||||||||||
Based on: 10-K (reporting date: 2022-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 78,820) | 78,820) | ÷ | 118,028) | = | 0.67 | 0.67 | × | 20.80% | = | 13.89% | ||
| Long-term debt, including current maturities3 | 23,625) | 23,625) | ÷ | 118,028) | = | 0.20 | 0.20 | × | 3.40% × (1 – 21.00%) | = | 0.54% | ||
| Operating lease liability4 | 15,583) | 15,583) | ÷ | 118,028) | = | 0.13 | 0.13 | × | 2.94% × (1 – 21.00%) | = | 0.31% | ||
| Total: | 118,028) | 1.00 | 14.74% | ||||||||||
Based on: 10-K (reporting date: 2021-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
FedEx Corp., economic spread ratio calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (6,521) | (4,769) | (5,603) | (4,517) | (4,076) | (2,302) | |
| Invested capital2 | 78,834) | 70,379) | 70,265) | 69,545) | 66,462) | 64,229) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -8.27% | -6.78% | -7.97% | -6.50% | -6.13% | -3.58% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Uber Technologies Inc. | — | 14.08% | 6.22% | -3.60% | -73.60% | -22.77% | |
| Union Pacific Corp. | — | -2.58% | -3.25% | -3.35% | -1.44% | -2.30% | |
| United Airlines Holdings Inc. | — | -2.57% | -1.75% | 0.91% | -3.31% | -10.24% | |
| United Parcel Service Inc. | — | -2.39% | -1.94% | 0.77% | 11.75% | 17.57% | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -6,521 ÷ 78,834 = -8.27%
4 Click competitor name to see calculations.
A sustained trend of economic value destruction is evident over the period ending May 31, 2026. The continuous expansion of the invested capital base has not been accompanied by a corresponding increase in returns, leading to a deepening of negative economic profit and a deterioration of the economic spread ratio.
- Economic Profit Trends
- Economic profit remained negative throughout the entire observation period. A downward trajectory is observed from 2021, where the loss stood at 2,302 million, deepening to 5,603 million by 2024. While a partial recovery occurred in 2025, reducing the loss to 4,769 million, the trend reversed sharply in 2026, reaching a period low of 6,521 million.
- Invested Capital Expansion
- There is a consistent upward trend in invested capital, which grew from 64,229 million in 2021 to 78,834 million in 2026. This growth indicates a steady increase in the resources deployed into the business, though these investments have not yet translated into positive economic value.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across all years, confirming that the return on invested capital consistently failed to exceed the cost of capital. The ratio deteriorated from -3.58% in 2021 to -8.27% in 2026. The volatility observed in 2025, where the ratio improved to -6.78%, was insufficient to reverse the broader long-term decline in value efficiency.
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Economic Profit Margin
FedEx Corp., economic profit margin calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (6,521) | (4,769) | (5,603) | (4,517) | (4,076) | (2,302) | |
| Revenue | 94,720) | 87,926) | 87,693) | 90,155) | 93,512) | 83,959) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -6.88% | -5.42% | -6.39% | -5.01% | -4.36% | -2.74% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Uber Technologies Inc. | — | 4.27% | 2.11% | -1.51% | -37.73% | -20.97% | |
| Union Pacific Corp. | — | -6.71% | -8.32% | -8.55% | -3.46% | -6.15% | |
| United Airlines Holdings Inc. | — | -2.18% | -1.51% | 0.76% | -3.02% | -21.56% | |
| United Parcel Service Inc. | — | -1.37% | -1.03% | 0.38% | 5.24% | 8.02% | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -6,521 ÷ 94,720 = -6.88%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2026 is characterized by a persistent failure to generate economic value, with the company consistently operating below its cost of capital throughout the observed period.
- Economic Profit Trajectory
- A consistent downward trend is observed in economic profit, which expanded from a deficit of 2,302 million US$ in 2021 to 6,521 million US$ by 2026. While a marginal recovery occurred in 2025, reducing the deficit to 4,769 million US$, this improvement was temporary and was followed by the sharpest decline in the period during 2026.
- Revenue and Capital Efficiency
- Revenue exhibited volatility, peaking in 2022 and 2026. Notably, the highest revenue recorded in 2026, totaling 94,720 million US$, coincided with the largest economic profit deficit. This inverse relationship suggests that top-line growth has not translated into economic value creation, indicating that the costs of capital and operating expenses are scaling faster than the returns generated from increased sales.
- Economic Profit Margin Analysis
- The economic profit margin shows a progressive deterioration, widening from -2.74% in 2021 to -6.88% in 2026. This trend indicates a significant erosion in the company's ability to cover its cost of capital relative to its revenue. Despite a brief improvement to -5.42% in 2025, the overall trend reflects a decline in capital efficiency and an increasing inability to achieve an economic surplus.
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