FedEx Plans to Keep Delivering, but Are Investors On Board?

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When FedEx Corp. (NYSE: FDX) reported its most recent quarterly results after the markets closed on Tuesday, the company posted $5.91 in earnings per share (EPS) and $17.31 billion in revenue. The consensus estimates from Thomson Reuters had called for $5.68 billion in EPS on revenue of $17.24 billion. The fiscal fourth quarter of last year reportedly had EPS of $4.25 and $15.73 billion in revenue.

During the quarter, the company ordered 12 incremental Boeing 777F aircraft and 12 incremental Boeing 767F aircraft as the next phase of the company’s ongoing fleet modernization program. The 777Fs will be delivered between fiscal 2021 and 2025. The 767Fs will be delivered between fiscal 2020 and 2022.

In terms of its segments, the firm reported its fourth-quarter numbers as follows:

  • Express had $9.60 billion in revenue, with an operating income of $1.10 billion and an operating margin of 11.5%.
  • Ground had $4.80 billion in revenue, with an operating income of $832 million and an operating margin of 17.3%.
  • Freight had $1.86 billion in revenue, with an operating income of $175 million and an operating margin of 9.4%.

Looking ahead to the 2019 fiscal full year, the company expects to see EPS in the range of $17.00 to $17.60 and revenue growth of roughly 9%. The consensus estimates call for $17.42 in EPS and $69.3 billion in revenue.

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

I am proud of the financial and operational results FedEx delivered in fiscal 2018 and extend well-deserved congratulations to our more than 425,000 team members worldwide for their continued dedication to the Purple Promise, which simply states, ‘I will make every FedEx experience outstanding.’ It was a year of opportunities and challenges—anticipated and unexpected—and FedEx emerged more competitive than ever. In all my years at FedEx, I have never been so optimistic and so sure of our strategy and our ability to deliver an exciting future.

Investors were less optimistic, as shares of FedEx dropped more than 2% to $252.45 Wednesday morning. The consensus analyst price target is $288.56 and the 52-week range is $203.13 to $274.66.