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: 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), 10-K (reporting date: 2020-05-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,913 – 11.34% × 70,379 = -3,069
The analysis of financial performance over the examined periods reveals several noteworthy trends and fluctuations. The Net Operating Profit After Taxes (NOPAT) shows variability with no clear upward or downward trajectory over the years. There was a significant increase from 2,531 million USD in 2020 to a peak of 7,163 million USD in 2021, followed by a decline to 5,014 million USD in 2022. Subsequent years exhibit a modest recovery and slight decreases, ultimately stabilizing around the 4,900 to 5,400 million USD range from 2023 to 2025.
The cost of capital indicates an increasing trend through most of the periods, starting at 10.26% in 2020 and peaking at 12.32% in 2024, before declining slightly to 11.34% in 2025. This rise suggests a higher required return on investments, which can pressure valuation and investment decisions.
Invested capital steadily increased year over year, growing from 57,553 million USD in 2020 to 70,379 million USD in 2025. This gradual rise indicates ongoing investment in the company’s asset base or operational capacity.
Despite the growth in invested capital and generally positive NOPAT values, economic profit remains negative throughout the entire period. The economic losses fluctuate considerably, improving from a large negative of -3,372 million USD in 2020 to a smaller deficit of -590 million USD in 2021, then deteriorating again and reaching depths beyond -3,700 million USD in 2024 before a slight improvement in 2025. This persistent negative economic profit implies that the returns generated by the company's operations have not exceeded the cost of capital, signaling value destruction rather than creation in economic terms.
- Summary of Key Observations
- Net operating profit demonstrates volatility with an initial surge followed by declines and moderate recovery, indicating inconsistent operational performance.
- Cost of capital rises over most years, suggesting increased financing costs or market risk perceptions.
- Invested capital shows a steady increase, reflecting sustained capital deployment in the business.
- Negative economic profit over all periods highlights a failure to generate returns greater than capital costs, pointing to potential inefficiencies or challenges in profitability despite operating profit levels.
Net Operating Profit after Taxes (NOPAT)
FedEx Corp., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-05-31).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 16,837 × 3.98% = 670
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,459 × 21.00% = 306
6 Addition of after taxes interest expense to net income.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 363 × 21.00% = 76
8 Elimination of after taxes investment income.
- 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.
Cash Operating Taxes
FedEx Corp., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-05-31).
- 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.
Invested Capital
FedEx Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-05-31).
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.
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.
Cost of Capital
FedEx Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 53,250) | 53,250) | ÷ | 87,967) | = | 0.61 | 0.61 | × | 16.81% | = | 10.18% | ||
| 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 | 11.34% | ||||||||||
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 | × | 16.81% | = | 11.39% | ||
| 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 | 12.32% | ||||||||||
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 | × | 16.81% | = | 10.75% | ||
| 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 | 11.74% | ||||||||||
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 | × | 16.81% | = | 10.26% | ||
| 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 | 11.24% | ||||||||||
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 | × | 16.81% | = | 11.23% | ||
| 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 | 12.07% | ||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,995) | 42,995) | ÷ | 80,398) | = | 0.53 | 0.53 | × | 16.81% | = | 8.99% | ||
| Long-term debt, including current maturities3 | 23,285) | 23,285) | ÷ | 80,398) | = | 0.29 | 0.29 | × | 3.60% × (1 – 21.00%) | = | 0.82% | ||
| Operating lease liability4 | 14,118) | 14,118) | ÷ | 80,398) | = | 0.18 | 0.18 | × | 3.19% × (1 – 21.00%) | = | 0.44% | ||
| Total: | 80,398) | 1.00 | 10.26% | ||||||||||
Based on: 10-K (reporting date: 2020-05-31).
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, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (3,069) | (3,703) | (2,742) | (2,458) | (590) | (3,372) | |
| Invested capital2 | 70,379) | 70,265) | 69,545) | 66,462) | 64,229) | 57,553) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -4.36% | -5.27% | -3.94% | -3.70% | -0.92% | -5.86% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Uber Technologies Inc. | — | 7.25% | -2.59% | -72.67% | -21.84% | -49.07% | |
| Union Pacific Corp. | — | -1.53% | -1.65% | 0.21% | -0.64% | -2.21% | |
| United Airlines Holdings Inc. | — | -0.98% | 1.38% | -2.81% | -9.81% | -25.36% | |
| United Parcel Service Inc. | — | 1.20% | 4.02% | 15.18% | 20.96% | -9.11% | |
Based on: 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), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -3,069 ÷ 70,379 = -4.36%
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuations during the observed periods. Starting from a substantial negative value of -3372 million USD in 2020, it improved markedly to -590 million USD in 2021. However, this improvement was not sustained, as economic profit deteriorated again to -2458 million USD in 2022 and further declined to -2742 million USD in 2023. The trend continued negatively with economic profit reaching -3703 million USD in 2024 before slightly improving to -3069 million USD in 2025. Overall, the data indicates persistent negative economic profitability with intermittent partial recoveries.
- Invested Capital
- Invested capital showed a steady upward trend throughout the period under review. The value increased consistently from 57,553 million USD in 2020 to 70,379 million USD in 2025, reflecting a cumulative growth of approximately 22%. The growth in invested capital suggests ongoing investment or expansion in assets over the six-year span.
- Economic Spread Ratio
- The economic spread ratio remained negative in all periods, indicative of returns below the cost of capital. Initially, it was -5.86% in 2020, then improved significantly to -0.92% in 2021. Following this improvement, the ratio worsened again to -3.7% in 2022 and deteriorated further to -3.94% in 2023. The most adverse value was recorded in 2024 at -5.27%, followed by a recovery to -4.36% in 2025. The movement in economic spread ratio mirrors the fluctuations observed in economic profit, with persistent negative spreads despite periods of relative improvement.
Economic Profit Margin
FedEx Corp., economic profit margin calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (3,069) | (3,703) | (2,742) | (2,458) | (590) | (3,372) | |
| Revenue | 87,926) | 87,693) | 90,155) | 93,512) | 83,959) | 69,217) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -3.49% | -4.22% | -3.04% | -2.63% | -0.70% | -4.87% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Uber Technologies Inc. | — | 2.46% | -1.09% | -37.25% | -20.12% | -92.69% | |
| Union Pacific Corp. | — | -3.91% | -4.21% | 0.50% | -1.71% | -6.60% | |
| United Airlines Holdings Inc. | — | -0.85% | 1.16% | -2.56% | -20.66% | -73.35% | |
| United Parcel Service Inc. | — | 0.64% | 2.01% | 6.77% | 9.57% | -3.57% | |
Based on: 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), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -3,069 ÷ 87,926 = -3.49%
3 Click competitor name to see calculations.
- Revenue Trends
- Revenue exhibited a generally increasing trend from 2020 to 2022, rising from approximately $69.2 billion to $93.5 billion. This increase was followed by a slight decline over the next two years, with revenue decreasing to about $87.7 billion by 2024 and remaining relatively stable into 2025.
- Economic Profit Analysis
- Economic profit consistently remained negative throughout the period, indicating losses in value creation above the cost of capital. The losses peaked in 2020 at approximately -$3.4 billion and improved significantly in 2021 to a loss of around -$590 million. However, from 2022 onwards, economic profit deteriorated again, reaching approximately -$3.7 billion in 2024 before improving slightly to around -$3.1 billion in 2025.
- Economic Profit Margin
- The economic profit margin followed a similar pattern to economic profit, starting from -4.87% in 2020 and showing marked improvement to -0.7% in 2021. Subsequently, it worsened steadily over the following years, declining to -4.22% in 2024 before improving modestly to -3.49% in 2025. This suggests fluctuations in profitability relative to revenue that mostly did not reach a positive threshold during the analyzed period.
- Overall Insights
- The data suggests that despite revenue growth during the early years, the company struggled to convert this top-line growth into positive economic profit. The brief improvement in 2021 may indicate temporary operational efficiencies or cost management, but the subsequent decline signals ongoing challenges in maintaining profitability above the economic cost. Stabilization of revenue in recent years has not yielded a corresponding improvement in economic profit status, indicating potential structural issues affecting overall value generation.