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FedEx (FDX) Down 1.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for FedEx (FDX - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FedEx due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Earnings Miss at FedEx in Q2
FedEx's second-quarter fiscal 2024 earnings per share of $3.99 per share missed the Zacks Consensus Estimate of $4.14. However, the bottom line improved 25.5% year over year. The uptick was backed by the execution of the company's DRIVE program initiatives and continued focus on service and revenue quality. Revenues of $22,165 million fell short of the Zacks Consensus Estimate of $22,328.9 million and decreased 3% from the year-ago fiscal quarter’s reported figure.
Operating expenses (reported basis) decreased 3% to $20,889 million owing to the company’s cost-reduction actions. Operating income, on a reported basis, increased 9% to $1,276 million from the year-ago fiscal quarter’s reported number.
FedEx Express segment’s revenues fell 6% year over year to $10,254 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment fell 60% year over year due to lower revenues, partially offset by reduced operating expenses.
FedEx Ground segment’s revenues increased 3% year over year to $8,639 million due to higher yield. Operating income grew 51% year over year, owing to yield improvement, cost reductions, and higher volumes. Cost per package declined 2%, driven by lower line-haul expenses and improved first-mile and last-mile productivity.
FedEx Freight revenues declined 4% from the year-ago fiscal quarter’s reported figure to $2,360 million. The segment’s operating income grew 11% year over year despite a decline in revenues. The uptick was backed by higher yield and increased efficiency, partially offset by lower shipments.
Average daily shipments declined 5%. Capital expenditures for second-quarter fiscal 2024 were $1,305 million.
Liquidity
FedEx exited second-quarter fiscal 2024 with cash and cash equivalents of $6,729 million compared with $7,055 million at the end of the prior quarter. Long-term debt (less current portion) was $20,193 million compared with $20,145 million at the prior-quarter end.
FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 2 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited second-quarter results by $0.05 per diluted share.
Fiscal 2024 Outlook
FDX now expects revenues to decline by low-single-digit percentage (prior view: flat year over year). Earnings per share are now expected to be in the range of $15.35-$16.85 (prior view: $15.10-$16.60) before the MTM retirement plans accounting adjustments. FDX continues to expect earnings in the range of $17.00-$18.50, excluding costs related to business optimization initiatives. FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. The effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $1 billion of common stock during fiscal 2024. As of Nov 30, 2023, FDX had available cash balance of $6.7 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.07% due to these changes.
VGM Scores
At this time, FedEx has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FedEx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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FedEx (FDX) Down 1.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for FedEx (FDX - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FedEx due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Earnings Miss at FedEx in Q2
FedEx's second-quarter fiscal 2024 earnings per share of $3.99 per share missed the Zacks Consensus Estimate of $4.14. However, the bottom line improved 25.5% year over year. The uptick was backed by the execution of the company's DRIVE program initiatives and continued focus on service and revenue quality. Revenues of $22,165 million fell short of the Zacks Consensus Estimate of $22,328.9 million and decreased 3% from the year-ago fiscal quarter’s reported figure.
Operating expenses (reported basis) decreased 3% to $20,889 million owing to the company’s cost-reduction actions. Operating income, on a reported basis, increased 9% to $1,276 million from the year-ago fiscal quarter’s reported number.
FedEx Express segment’s revenues fell 6% year over year to $10,254 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment fell 60% year over year due to lower revenues, partially offset by reduced operating expenses.
FedEx Ground segment’s revenues increased 3% year over year to $8,639 million due to higher yield. Operating income grew 51% year over year, owing to yield improvement, cost reductions, and higher volumes. Cost per package declined 2%, driven by lower line-haul expenses and improved first-mile and last-mile productivity.
FedEx Freight revenues declined 4% from the year-ago fiscal quarter’s reported figure to $2,360 million. The segment’s operating income grew 11% year over year despite a decline in revenues. The uptick was backed by higher yield and increased efficiency, partially offset by lower shipments.
Average daily shipments declined 5%. Capital expenditures for second-quarter fiscal 2024 were $1,305 million.
Liquidity
FedEx exited second-quarter fiscal 2024 with cash and cash equivalents of $6,729 million compared with $7,055 million at the end of the prior quarter. Long-term debt (less current portion) was $20,193 million compared with $20,145 million at the prior-quarter end.
FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 2 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited second-quarter results by $0.05 per diluted share.
Fiscal 2024 Outlook
FDX now expects revenues to decline by low-single-digit percentage (prior view: flat year over year). Earnings per share are now expected to be in the range of $15.35-$16.85 (prior view: $15.10-$16.60) before the MTM retirement plans accounting adjustments. FDX continues to expect earnings in the range of $17.00-$18.50, excluding costs related to business optimization initiatives. FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. The effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $1 billion of common stock during fiscal 2024. As of Nov 30, 2023, FDX had available cash balance of $6.7 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.07% due to these changes.
VGM Scores
At this time, FedEx has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FedEx has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.