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 – 14.62% × 78,834 = -6,570
The financial analysis of economic value added reveals a persistent trend of negative economic profit from 2021 through the 2026 projections. This indicates that the net operating profit after taxes has consistently failed to exceed the cost of the capital invested in the business, resulting in a continuous destruction of shareholder value over the observed period.
- Net Operating Profit After Taxes (NOPAT) Trends
- A significant contraction in NOPAT is observed between 2021 and 2022, where values dropped from 7,163 million to 5,014 million. Following a brief recovery in 2023 to 5,421 million, the operating profit enters a period of stagnation, remaining largely flat between 4,913 million and 4,955 million from 2024 through 2026.
- Invested Capital Growth
- There is a consistent upward trajectory in invested capital, rising from 64,229 million in 2021 to a projected 78,834 million by 2026. The growth of the capital base without a proportional increase in operating returns creates a widening gap between actual profit and the required return on investment.
- Cost of Capital Volatility
- The cost of capital has fluctuated between a low of 13.73% in 2022 and a peak of 15.09% in 2024. These fluctuations influence the magnitude of the economic profit deficit, with higher capital costs contributing to deeper losses in value creation during the 2024 and 2026 periods.
- Economic Profit Trajectory
- Economic profit remains negative throughout the entire timeframe, demonstrating an overall deteriorating trend. The deficit increased from -2,343 million in 2021 to a projected -6,570 million in 2026. The most pronounced decline occurs between 2023 and 2024, and again leading into 2026, driven by the combination of an expanding capital base and stagnant operating profits.
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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 | × | 20.90% | = | 13.51% | ||
| 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 | 14.62% | ||||||||||
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 | × | 20.90% | = | 12.65% | ||
| 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 | 13.81% | ||||||||||
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 | × | 20.90% | = | 14.16% | ||
| 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 | 15.09% | ||||||||||
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 | × | 20.90% | = | 13.37% | ||
| 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 | 14.35% | ||||||||||
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 | × | 20.90% | = | 12.75% | ||
| 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 | 13.73% | ||||||||||
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 | × | 20.90% | = | 13.96% | ||
| 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 | 14.80% | ||||||||||
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 | (6,570) | (4,810) | (5,649) | (4,560) | (4,115) | (2,343) | |
| Invested capital2 | 78,834) | 70,379) | 70,265) | 69,545) | 66,462) | 64,229) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -8.33% | -6.83% | -8.04% | -6.56% | -6.19% | -3.65% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Uber Technologies Inc. | — | 14.01% | 6.16% | -3.67% | -73.67% | -22.83% | |
| Union Pacific Corp. | — | -2.59% | -3.26% | -3.36% | -1.44% | -2.31% | |
| United Airlines Holdings Inc. | — | -2.62% | -1.80% | 0.88% | -3.34% | -10.26% | |
| United Parcel Service Inc. | — | -2.42% | -1.97% | 0.74% | 11.71% | 17.54% | |
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 × -6,570 ÷ 78,834 = -8.33%
4 Click competitor name to see calculations.
The analysis of economic value added metrics indicates a sustained period of value destruction between May 31, 2021, and May 31, 2026. The company consistently failed to generate returns above its cost of capital, as evidenced by the persistent negative economic profit and a deteriorating economic spread ratio.
- Economic Profit Trends
- Economic profit remained negative throughout the entire period, demonstrating a general trajectory of decline. Losses expanded from -2,343 million US$ in 2021 to a peak deficit of -6,570 million US$ by 2026. While a marginal recovery was observed in 2025, with losses narrowing to -4,810 million US$, this improvement was short-lived and followed by the steepest decline in the series.
- Invested Capital Expansion
- Invested capital exhibited a steady upward trend, increasing from 64,229 million US$ in 2021 to 78,834 million US$ in 2026. This growth indicates a continuous deployment of resources into the business; however, the simultaneous decline in economic profit suggests that these additional investments did not yield returns sufficient to cover the cost of the capital employed.
- Economic Spread Ratio Performance
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, remained negative and generally widened over the analyzed timeframe. The ratio deteriorated from -3.65% in 2021 to -8.33% in 2026. The widening of this negative spread confirms a growing inefficiency in capital utilization, where the cost of funding consistently outpaced the operational returns generated by the invested capital.
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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 | (6,570) | (4,810) | (5,649) | (4,560) | (4,115) | (2,343) | |
| Revenue | 94,720) | 87,926) | 87,693) | 90,155) | 93,512) | 83,959) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -6.94% | -5.47% | -6.44% | -5.06% | -4.40% | -2.79% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Uber Technologies Inc. | — | 4.25% | 2.09% | -1.54% | -37.76% | -21.03% | |
| Union Pacific Corp. | — | -6.72% | -8.34% | -8.56% | -3.47% | -6.17% | |
| United Airlines Holdings Inc. | — | -2.22% | -1.55% | 0.74% | -3.05% | -21.62% | |
| United Parcel Service Inc. | — | -1.38% | -1.04% | 0.37% | 5.23% | 8.01% | |
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 × -6,570 ÷ 94,720 = -6.94%
3 Click competitor name to see calculations.
Analysis of the company's economic value added indicates a continuous failure to generate positive economic profit over the period from May 31, 2021, to May 31, 2026. The persistent negative values suggest that the returns generated by the business have remained consistently below the required cost of capital, resulting in a sustained erosion of economic value.
- Economic Profit Trend
- A general downward trajectory is observed in absolute economic profit, which expanded from a loss of US$ 2,343 million in 2021 to US$ 6,570 million by 2026. While a temporary reduction in the economic loss occurred in 2025, falling to US$ 4,810 million, this recovery was short-lived as the loss reached its peak magnitude in the final year of the analyzed period.
- Revenue Performance
- Revenue exhibited volatility, peaking in 2022 at US$ 93,512 million and reaching a period high in 2026 at US$ 94,720 million. However, the expansion in top-line revenue did not translate into improved economic profit, indicating that revenue growth was decoupled from capital efficiency or was offset by rising operational costs and capital charges.
- Economic Profit Margin Analysis
- The economic profit margin shows a consistent deterioration, moving from -2.79% in 2021 to -6.94% in 2026. This widening negative margin indicates that the company's ability to cover its cost of capital relative to its revenue decreased over the six-year period. The margin mirrored the absolute profit trend, experiencing a slight correction to -5.47% in 2025 before declining to its lowest point in 2026.
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