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FedEx (FDX) Likely to Beat on Q2 Earnings: Stock to Gain?
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FedEx Corporation (FDX - Free Report) is set to report second-quarter fiscal 2017 results after the closing bell on Dec 20.
Last quarter, FedEx – a leading player in the field of global express delivery services – posted a positive surprise of 3.94%. The company has an impressive record with respect to earnings, having surpassed expectations in each of the last four quarters. The average earnings beat is 3.92%.
We note that shares of FedEx have been on an uptrend in recent times. The stock has comfortably outpaced the Zacks categorized Transportation-Air Freight industry over the last three months. The stock gained 22.73% compared with the industry, which advanced just 14.26% over the same period.
We expect FedEx to continue its impressive earnings performance. The company is likely to post another beat in the second quarter on the back of its strong product portfolio, which has significantly expanded following the acquisition of TNT Express, earlier this year.
In the event of the company reporting better-than-expected earnings its stock price will be further boosted, thereby continuing its northward movement. The Zacks Consensus Estimate of $2.92 per share for the second quarter indicates a year-over-year improvement of 13%, reflecting the optimism surrounding the stock.
Our quantitative model too hints at an earnings beat. Here’s why:
FedEx possesses the right combination of the two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – necessary for increasing the chances of an earnings surprise.
Zacks ESP: The Earnings ESP for FedEx is +1.03%. This is because the Most Accurate estimate is currently $2.95 per share, which is 3 cents above the Zacks Consensus Estimate.
We expect FedEx to perform well in the fiscal second quarter on the back of solid performance at its Ground and freight divisions. The inclusion of the products of erstwhile TNT Express should aid the top line this quarter. Following the acquisition, FedEx’s scale of operations, particularly in Europe, has expanded a great deal. The expansion of its capabilities has enabled FedEx to compete more effectively with rivals like United Parcel Service Inc. (UPS - Free Report) that has a substantial European presence. Although the full impact of holiday season sales will not be reflected in the second quarter, results are likely to be boosted to some extent by the same.
We are impressed by FedEx’s efforts to meet the surge in demand. Investors will keenly await a detailed commentary on the issue at the conference call. Focus will also remain on whether FedEx will tweak its fiscal 2017 earnings guidance while revealing its fiscal second quarter results. Moreover, investors will also look forward to FedEx’s take on Amazon.com, Inc.’s (AMZN - Free Report) performance in the package delivery market.
However, the bottom-line is likely to be adversely impacted by the increase in costs due to the TNT Express integration process. Adverse foreign currency movements are also likely to hurt the top-line in the quarter.
Another Gem in the Transportation Space
Apart from FedEx, we also expect Hawaiian Holdings, Inc. (HA - Free Report) to beat bottom-line estimates in its next earnings release. Hawaiian Holdings has an earnings ESP of +1.56% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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FedEx (FDX) Likely to Beat on Q2 Earnings: Stock to Gain?
FedEx Corporation (FDX - Free Report) is set to report second-quarter fiscal 2017 results after the closing bell on Dec 20.
Last quarter, FedEx – a leading player in the field of global express delivery services – posted a positive surprise of 3.94%. The company has an impressive record with respect to earnings, having surpassed expectations in each of the last four quarters. The average earnings beat is 3.92%.
We note that shares of FedEx have been on an uptrend in recent times. The stock has comfortably outpaced the Zacks categorized Transportation-Air Freight industry over the last three months. The stock gained 22.73% compared with the industry, which advanced just 14.26% over the same period.
We expect FedEx to continue its impressive earnings performance. The company is likely to post another beat in the second quarter on the back of its strong product portfolio, which has significantly expanded following the acquisition of TNT Express, earlier this year.
In the event of the company reporting better-than-expected earnings its stock price will be further boosted, thereby continuing its northward movement. The Zacks Consensus Estimate of $2.92 per share for the second quarter indicates a year-over-year improvement of 13%, reflecting the optimism surrounding the stock.
Our quantitative model too hints at an earnings beat. Here’s why:
FedEx possesses the right combination of the two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – necessary for increasing the chances of an earnings surprise.
Zacks ESP: The Earnings ESP for FedEx is +1.03%. This is because the Most Accurate estimate is currently $2.95 per share, which is 3 cents above the Zacks Consensus Estimate.
Zacks Rank: FedEx carries a Zacks Rank #3.
FEDEX CORP Price and EPS Surprise
FEDEX CORP Price and EPS Surprise | FEDEX CORP Quote
Factors to Consider
We expect FedEx to perform well in the fiscal second quarter on the back of solid performance at its Ground and freight divisions. The inclusion of the products of erstwhile TNT Express should aid the top line this quarter. Following the acquisition, FedEx’s scale of operations, particularly in Europe, has expanded a great deal. The expansion of its capabilities has enabled FedEx to compete more effectively with rivals like United Parcel Service Inc. (UPS - Free Report) that has a substantial European presence. Although the full impact of holiday season sales will not be reflected in the second quarter, results are likely to be boosted to some extent by the same.
We are impressed by FedEx’s efforts to meet the surge in demand. Investors will keenly await a detailed commentary on the issue at the conference call. Focus will also remain on whether FedEx will tweak its fiscal 2017 earnings guidance while revealing its fiscal second quarter results. Moreover, investors will also look forward to FedEx’s take on Amazon.com, Inc.’s (AMZN - Free Report) performance in the package delivery market.
However, the bottom-line is likely to be adversely impacted by the increase in costs due to the TNT Express integration process. Adverse foreign currency movements are also likely to hurt the top-line in the quarter.
Another Gem in the Transportation Space
Apart from FedEx, we also expect Hawaiian Holdings, Inc. (HA - Free Report) to beat bottom-line estimates in its next earnings release. Hawaiian Holdings has an earnings ESP of +1.56% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>