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Will FedEx (FDX) Beat on Q2 Earnings on E-commerce Growth?

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FedEx Corporation (FDX - Free Report) is set to release second-quarter fiscal 2021 (ended Nov 30, 2020) results on Dec 17, after market close.

The Zacks Consensus Estimate for second-quarter fiscal 2021 earnings has been revised 2.1% upward to $3.90 in the past 60 days. Moreover, the company has a decent earnings history as its bottom line outshined the consensus mark in two of the trailing four quarters and missed the same in the remaining two. The average beat is 37.7%.

FedEx Corporation Price and EPS Surprise

FedEx Corporation Price and EPS Surprise

FedEx Corporation price-eps-surprise | FedEx Corporation Quote

Against this backdrop, let’s take a look at the factors that are likely to have impacted the company’s performance in the to-be-reported quarter.

The continued surge in e-commerce demand during the current coronavirus-ravaged times is likely to have boosted revenues in the to-be-reported quarter. With the pandemic largely restricting people to their homes, the need for door-to-door delivery of essentials during this unprecedented crisis is rising.

Overall performance is likely to have been aided by higher revenues at the company’s Ground unit, which handles e-commerce deliveries for many retailers. Residential volume growth is expected to have driven Fedex Ground revenues in the quarter to be reported. The Zacks Consensus Estimate for FedEx Ground revenues in the fiscal second quarter is currently pegged at $6,957 million, indicating a 30.9% improvement from the year-ago quarter’s reported figure.

In fact, this boom in e-commerce already drove the recent quarterly results of the company’s rival United Parcel Service (UPS - Free Report) apart from the financial performance of other transportation companies like Atlas Air Worldwide Holdings and Air Transport Services Group (ATSG - Free Report) . However, revenues at the company’s Freight segment might have suffered due to the coronavirus-induced fall in average daily shipments. The Zacks Consensus Estimate for FedEx Freight revenues in the fiscal second quarter currently stands at $1,784 million, indicating a 3.3% dip from the year-ago quarter’s reported number.

Earnings Whispers

The proven Zacks model predicts an earnings beat for FedEx this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: FedEx has an Earnings ESP of +4.80% as the Most Accurate Estimate is pegged at $4.09, higher than the Zacks Consensus Estimate by 19 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: FedEx carries a Zacks Rank #3, currently.

Highlights of Q1 Earnings

The company’s earnings (excluding 14 cents from non-recurring items) of $4.87 per share handsomely surpassed the Zacks Consensus Estimate of $2.59. Moreover, the bottom line surged approximately 60% year over year, driven by increased volumes at FedEx International Priority and U.S. domestic residential-package services as well as yield improvement at FedEx Ground and FedEx Freight.

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