FedEx Reports Earnings June 19 - When Operating Leverage Becomes A Drag - Seeking Alpha It is an interesting comparison between FDX and UPS (UPS): If you think the economy will remain sluggish and growth unevenly, UPS is actually the better buy-and-hold, given UPS has a better balance sheet and less operating leverage. FDX is more of a pure play on a stronger economic recovery since the stock price performance correlates closely with volume growth, and given FDX's operating leverage, an investor gets better upside from a given percent change in revenues in FDX than UPS. By division, Fed-Ex Express is still the bread and butter at FDX, representing 2/3 of revenue but about half of total operating income. But the problem for a while has been volumes: Express volumes fell 4.5% in the February quarter, and were also negative the prior two quarters before that. In fact, a research note out of Credit Suisse noted that Domestic Express volumes have fallen 4 of the last 6 years, and Credit Suisse is looking for a 4% contraction in fiscal 2012, which would make it 5 of the last 7 years.