When you're looking to buy a stock to gain exposure to a particular industry, you're frequently choosing between companies with similar business models. 

FedEx Corp. (NYSE: FDX) and United Parcel Service Inc. (NYSE: UPS) are similar businesses, but the stocks have behaved quite differently this year. 

FedEx stock is up 81.81% on a one-year basis, with a rally that began almost exactly a year ago. You can get a granular look at that using MarketBeat's FedEx chart. 

Meanwhile, UPS is down 0.05% in that time. The UPS chart shows a rally attempt early in the year, and another in June and July, but the stock broke down beginning in August. It's posted a three-month decline of 12.58 %. 

UPS is the larger company, with a market capitalization of $131.59 billion, versus FedEx's market cap of $65.36 billion. It's generally easier for a company with a smaller market cap to grow its stock price faster because a smaller company can generally be more nimble.

FedEx and UPS have a similar number of employees. But a smaller company, even if both are S&P 500 components, can grow at a better rate. That's because the smaller company typically has greater growth potential, as it's able to innovate and expand at a faster rate.

The price-performance divergence is the tip of the iceberg; here's a look at what is driving FedEx higher while UPS is slower to deliver. 

FedEx Cost Cuts 

A year ago, FedEx began a program of slashing expenses in an effort to boost margins as the global shipping industry slowed down after a pandemic-era boom. FedEx's margins have lagged those of UPS, a gap FedEx wants to close. 

The company shut offices and retail locations, slashed jobs, reduced its fleet of planes, and ended Sunday deliveries in rural areas. It's also moving more items via rail, which is more cost-effective than trucks. 

When FedEx reported fiscal first-quarter earnings on September 20, it said cost reductions boosted operating income. The stock gapped up 4.52% following the quarterly report. 

UPS, too, cut costs, with measures including reducing management headcount, cutting non-driver jobs and offering senior pilots a buyout opportunity. 

However, UPS stock began turning lower in early August after the company cut its earnings and revenue forecasts due to lost business as it conducted labor negotiations. It also cited lower package revenue domestically and internationally. 

FedEx' Faster Earnings Growth

Take a look at MarketBeat's FedEx earnings data, which shows you the year-over-year earnings growth of 32% in the most recent quarter. 

Earnings slowed in the previous four quarters, while revenue decelerated in the past four quarters. 

However, analysts see earnings growing 21% this year to $18.11 a share. Next year, that's rising by another 23% to $22.24 a share. 

UPS' earnings declined in the past two quarters, and Wall Street expects a 28% drop this year to $9.34 per share. Revenue declines accelerated in the past two quarters.  

The company is expected to see an earnings rebound next year, with net income growing by 11% to $10.35 a share.

The upshot of those numbers? FedEx is expected to post better earning growth in the next two years, which means FedEx has a better probability of attracting more investment dollars. 

Analysts More Upbeat About FedEx 

MarketBeat's FedEx analyst ratings show a consensus view of "moderate-buy," with 11 analysts boosting their price targets on the stock after the most recent quarterly report.

UPS' analyst ratings show a consensus of “hold.” In recent months, analysts haven't been as enthusiastic about the company. UPS last reported earnings on August 8, when it slashed revenue guidance.

Following that report, 11 analysts either lowered their price target or reduced their rating on UPS stock. 

In a report immediately after the earnings release, Bank of America analysts said they were raising their adjusted EPS target to a range between $17 and $18.50, from a previous range of $16.50 to $18.50, raising its midpoint EPS by 1.5%/

Bank of America analyst cited improved competitive dynamics at FedEx's ground and freight business units, offsetting softening macro demand and rising fuel costs.