What happened

Shares of FedEx (FDX -0.24%) gained 14.4% in September, according to data provided by S&P Global Market Intelligence, as the company reported better-than-expected quarterly results. Investors have spent a long time waiting for this company to hit the fast lane, and it appears FedEx is finally delivering.

So what

FedEx shareholders had a miserable 2019 as the company increased spending to build out its infrastructure and automate internal systems. The company had promised a payoff from all of that spending in 2020, but the COVID-19 pandemic added a layer of uncertainty early in the year.

The second half of 2020 has shown steady improvement, with the shares speeding higher in July, August, and now September. The catalyst in September was FedEx reporting fiscal first-quarter earnings of $4.87 per share on revenue of $19.3 billion, beating analyst expectations for earnings of $2.69 per share on revenue of $17.6 billion.

A FedEx plane on the runway.

Image source: FedEx.

Like other transportation companies FedEx has seen expenses go up to fund COVID-19 safety measures, but that cost has been more than offset by higher demand for its services. In the quarter FedEx saw strong volume growth in international shipping, due in part to a lack of competition from passenger airlines, as well as for U.S. residential package delivery.

FedEx spent in 2019 in part with a plan to offer Sunday service, and the added day of service is helping to increase yields on its consumer business.

"Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies," CEO Fred Smith said in a statement.

Now what

FedEx shares are now up 183% from their March lows, but I believe the stock still has room to run. On the post-earnings call with investors chief marketing officer Brie Carere said FedEx is preparing for "a peak like no other" this holiday season, as the pandemic continues to push more and more shopping online.

FDX Chart

FDX data by YCharts

The company has shown it can generate earnings through the pandemic. Over the coming quarters I expect to see strong pricing power boost margins and improved free cash flow. FedEx shares can keep on trucking.