Should FedEx Get More Credit for Its Q4 Earnings?

Chris Lange

When FedEx Corp. (NYSE: FDX) released its fiscal fourth-quarter results after the markets closed on Tuesday, the delivery giant said that it had $5.01 in earnings per share (EPS) and $17.8 billion in revenue. Consensus estimates had called for $4.93 in EPS and revenue of $17.88 billion. In the same period of last year, it said it had EPS of $5.91 on $17.31 billion in revenue.

Fourth-quarter operating income was negatively affected by lower FedEx International Priority package and freight revenues at FedEx Express, higher costs at FedEx Ground and business realignment costs primarily associated with the U.S.-based voluntary employee buyout program.

Partially offsetting these factors were the benefits from U.S. volume growth, increased revenue per shipment at FedEx Freight and FedEx Ground, lower variable incentive compensation expenses and a favorable net impact of fuel at all transportation segments.

Looking ahead to the 2020 fiscal full year, the company expects to see an EPS increase by a low-single-digit percentage. Consensus estimates call for $16.22 in EPS and $72.3 billion in revenue for the year.

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

Fiscal 2019 was a year of both challenge and change for FedEx. We are proud of our team members, who are responding with positive actions and innovative solutions that will make FedEx even stronger and more successful in the future. FedEx enters fiscal 2020 with a sharp focus on extending our lead as the premier global transportation and logistics company and on making the necessary investments today to capture the significant market opportunities we see for the future. These actions include enhancing FedEx Ground capabilities, speed and efficiency; improving FedEx Express hub automation; modernizing our FedEx Express air fleet; integrating TNT Express; and reducing unit costs and increasing productivity.

Shares of FedEx were up about 1% at $157.76 on Wednesday, in a 52-week range of $150.68 to $259.25. The consensus price target is $197.69.