FedEx (FDX 1.48%) delivered better-than-expected earnings and sees improvements ahead for shipping companies. Investors are pleased with the update, sending FedEx shares up 13% as of 10:30 a.m. ET.

Cutting costs in a tough environment

FedEx stock came into earnings season flat for the year. Shipping companies have been battling sluggish demand through most of the year, a reflection of corporate uncertainty about the economy. FedEx has responded by cutting costs, but investors were eager to see signs of improvement.

The company earned $5.41 per share on sales of $22.1 billion in its fiscal fourth quarter ending May 31, topping Wall Street's consensus estimate of $5.35 per share on sales of $22.07 billion. FedEx also forecast fiscal 2025 earnings of between $20 and $22 per share, offering some upside to the consensus $20.91-per-share estimate.

"We made significant progress in fiscal 2024 and ended the year strong, delivering four consecutive quarters of expanding operating income and margin in a challenging revenue environment," CEO Raj Subramaniam said in a statement. "We expect this momentum to continue in fiscal 2025 as we advance our efforts to create the world's most flexible, efficient, and intelligent network."

FedEx said it is assessing the role of FedEx Freight in its portfolio, the nation's largest less-than-truckload operation. Rival United Parcel Service already sold off its trucking arm, and it appears FedEx might follow that path in the quarters to come.

Is FedEx stock a buy?

FedEx only sees revenue growing by "low-to-mid single-digit" percentages in fiscal 2025, an indication the company is not forecasting a quick rebound in demand. But the company does expect its cost reduction program to slash expenses by $2.2 billion, and the potential sale of its lower-margin trucking business offers some unexpected upside.

FedEx has a long history of delivering for shareholders and the company appears to be on the right road. This is a cyclical business, and it could take a few quarters for the stock to really accelerate, but FedEx remains an attractive choice for long-term focused investors.