Why FedEx Earnings Are in the Express Lane for Underperforming
FedEx released disappointing third-quarter results after the markets closed on Tuesday and shares retreated early Wednesday.
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When FedEx Corp. (NYSE: FDX | FDX Price Prediction) released its most recent quarterly results after the markets closed on Tuesday, the firm said that it had $3.03 in earnings per share (EPS) and $17.01 billion in revenue. That compared with consensus estimates of $3.11 in EPS and $17.67 billion in revenue, as well as the $3.72 per share and $16.53 billion posted in the same period of last year.
Overall, operating income improved due to lower variable incentive compensation expenses, U.S. volume growth, a favorable net impact of fuel at all transportation segments and increased yields at FedEx Freight and FedEx Ground.
Also, FedEx Express international revenue declined as a result of lower yields and unfavorable exchange rates. FedEx Express international and U.S. yields were down due primarily to higher growth in lower-yielding services and lower weight per shipment.
Looking ahead to the fiscal full year, the firm expects to see EPS in the range of $15.10 to $15.90. Consensus estimates call for $15.97 in EPS and $70.88 billion in revenue for the year.
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Frederick W. Smith, FedEx board chair and chief executive, commented:
Our third quarter financial results were below our expectations and we are focused on initiatives to improve our performance. Our investments in innovation, network infrastructure and automation will increase our competitiveness and drive long-term earnings growth. FedEx built and operates the preeminent global parcel and logistics network, and we have a lengthy track record of success.
Shares of FedEx closed Tuesday at $181.41, in a 52-week range of $150.94 to $266.67. The consensus price target is $221.40. Following the announcement, the stock was down about 6% at $170.20 in early trading indications Wednesday.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
