Is FedEx in Trouble After This Report?

FedEx Corp. (NYSE: FDX) reported its most recent quarterly results after the markets closed on Tuesday. The firm said that it had $3.05 in earnings per share (EPS) and $17.08 billion in revenue, which compares to consensus estimates that called for $3.16 in EPS and $17.06 billion in revenue. In the fiscal first quarter of last year, it posted $3.46 in EPS and $17.05 billion in revenue.

Overall, operating results declined primarily due to weakening global economic conditions, increased costs to expand service offerings and continued mix shift to lower-yielding services. These factors were partially offset by lower variable incentive compensation expenses, revenue growth at FedEx Ground and increased yields at FedEx Freight.

FedEx is lowering its fiscal 2020 earnings forecast as the company’s revenue outlook has been reduced due to increased trade tensions and additional weakening of global economic conditions since the company’s initial fiscal 2020 forecast in June.

As a result, FedEx updated guidance for the fiscal 2020 full year. The company now expects to see EPS in the range of $11.00 to $13.00. The consensus estimates are $14.70 in EPS and $71.29 billion in revenue for the fiscal year.

Frederick W. Smith, FedEx board chair and CEO, commented:

Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty. Despite these challenges, we are positioning FedEx to leverage future growth opportunities as we continue the integration of TNT Express, enhance FedEx Ground residential delivery capabilities and modernize the FedEx Express air fleet and hub operations.

Shares of FedEx closed at $173.55, in a 52-week range of $147.82 to $250.95. The consensus price target is $187.19. Following the announcement, the stock was down 8% at $160.05 in the after-hours session.