Why FedEx Failed to Deliver in Q1
FedEx shares slipped after it reported mixed fiscal first-quarter financial results after the markets closed on Monday.
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When FedEx Corp. (NYSE: FDX) reported its fiscal first-quarter financial results after the markets closed on Monday, the company posted $3.46 in earnings per share (EPS) and $17.1 billion in revenue. That compared with consensus estimates of $3.82 in EPS and $16.88 billion in revenue, as well as the $2.51 per share and $15.3 billion reported in the same period of last year.
During the most recent quarter, operating income improved, benefitting from higher volumes, increased yields and a favorable net impact of fuel at all transportation segments. Net results benefited by $0.50 per diluted share as a result of the enactment of the Tax Cuts and Jobs Act, primarily from a lower statutory income tax rate.
Last year’s earnings included the estimated negative impacts of the NotPetya cyberattack affecting TNT Express ($300 million or $0.79 per diluted share) and Hurricane Harvey ($0.02 per diluted share).
Looking ahead to the fiscal 2019 full year, the company expects to see EPS in the range of $17.20 to $17.80 and revenue growth of roughly 9%. Consensus estimates call for $17.33 in EPS and $70.9 billion in revenue for the year.
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Frederick W. Smith, FedEx board chair and chief executive, commented:
FedEx delivered higher first-quarter earnings driven by solid execution of our business plan and a strong U.S. economy. We are very optimistic about our prospects for profitable growth and remain confident we will reach our goal to improve FedEx Express operating income by $1.2 billion to $1.5 billion in fiscal 2020 versus fiscal 2017.
Shares of FedEx closed Monday at $255.73, with a consensus analyst price target of $286.24 and a 52-week range of $214.17 to $274.66. Following the announcement, the stock was down about 2% at $250.81 in early trading indications Tuesday.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
