Why FedEx Is Taking a Step Back After Earnings

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When FedEx Corp. (NYSE: FDX) reported its fiscal first-quarter financial results late on Tuesday, the delivery giant said that it had $2.51 in earnings per share (EPS) and $15.3 billion in revenue. That compared with consensus estimates of $3.09 in EPS and revenue of $15.35 billion. The same period of last year reportedly had EPS of $2.90 and $14.66 billion in revenue.

The company noted that financial results during the quarter benefited from higher base rates in its transportation segments. Although this was more than offset by reduced revenue and increased expenses resulting from the TNT Express cyberattack, higher costs at FedEx Ground and the impact from Hurricane Harvey.

These setbacks would actually go on to influence FedEx’s guidance for the for the fiscal-full year. The company lowered its fiscal 2018 forecast to $11.05 to $11.85 in EPS, from the previous level of $12.00 to $12.80 in EPS. The consensus estimates call for $13.38 in EPS and $63.32 billion in revenue for the fiscal full year.

As for its segments, FedEx reported as follows:

  • FedEx Express had revenues of $8.65 billion, with operating income of $521 million.
  • FedEx Ground had revenues of $4.64 billion, with operating income of $626 million.
  • FedEx Freight had revenues of $1.75 billion, with $176 million in operating income.

Frederick W. Smith, FedEx board chair and chief executive, commented:

The first quarter posed significant operational challenges due to the TNT Express cyberattack and Hurricane Harvey, and I want to thank our team members for their extraordinary dedication and performance. We are confident of our prospects for long-term profitable growth, and we reaffirm our commitment to improve operating income at the FedEx Express segment by $1.2 billion to $1.5 billion in fiscal 2020 versus fiscal 2017.

Shares of FedEx closed Tuesday at $216.00, with a consensus analyst price target of $230.10 and a 52-week range of $161.65 to $219.99. Following the release of the earnings report, the stock was down 1.5% at $212.69 in Wednesday’s early trading indications.