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FedEx Corporation (FDX - Free Report) reported disappointing results in the first quarter of fiscal 2018 (ended Aug 31, 2017). This downside was driven mainly by the cyberattack in June, affecting the company’s subsidiary, TNT Express. Hurricane Harvey has also hurt its operations.
The earnings and revenue miss discouraged investors. Consequently, the stock fell 1.4% in aftermarket trading on Sep 19.
The company’s earnings (excluding 32 cents from non-recurring items) of $2.51 per share significantly fell short of the Zacks Consensus Estimate of $3.17. Furthermore, the bottom line declined 13.5% on a year-over-year basis due to higher costs.
Quarterly revenues increased 4.3% year over year to $15,297 million, lagging the Zacks Consensus Estimate of $15,368.7 million. The top line was hurt primarily due to the TNT Express cyberattack.
Operating income (on an adjusted basis) decreased 6.8% year over year to $1.24 billion in the quarter primarily due to the cyberattack. Also, operating margin contracted to 8.1% during the quarter from 9.1% in first-quarter fiscal 2017.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) improved 2.2% to $8.65 billion, driven by hiked base rates and higher package volume. Operating income came in at $521 million, down 20.1% year over year, while operating margin reduced to 6% year over year. Operating results were hampered by the cyberattack.
FedEx Ground revenues gained 8% year over year to $4.64 billion in the fiscal first quarter. In fact, volume expansion and higher base rates aided the segmental performance during the reviewed quarter. Average daily volume rose 4% in the fiscal first quarter. Operating income came in at $626 million, up 3%. Operating margin declined 70 basis points (bps) to 13.5%.
FedEx Freight revenues rose 6% year over year to $1.75 billion. Segmental revenues were benefited by increased base rates and fuel surcharges. Also, the segment’s operating income surged 30% to $176 million. Plus, operating margin expanded 190 bps to 10%.
FedEx Corporation Price, Consensus and EPS Surprise
The company has lowered guidance for fiscal 2018due to concerning effect fromTNT Express cyberattack. It now expects earnings in the band of $11.05-$11.85 per share, excluding year-end MTM pension accounting adjustments.Previous outlook had called for a rise in the metric of $13.20-$14 per share. The Zacks Consensus Estimate for fiscal 2018 is currently pegged at $13.63 per share. Notably, the guidance assumes moderate economic growth and recovery from the cyberattack. Capital expenses are still projected at $5.9 billion.
Shares of Air France-KLM and Deutsche Lufthansa have soared more than 100% in a year while Canadian National Railway shares have rallied 27.7% over the same time period.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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FedEx (FDX) Q1 Earnings & Revenues Lag, FY18 View Bearish
FedEx Corporation (FDX - Free Report) reported disappointing results in the first quarter of fiscal 2018 (ended Aug 31, 2017). This downside was driven mainly by the cyberattack in June, affecting the company’s subsidiary, TNT Express. Hurricane Harvey has also hurt its operations.
The earnings and revenue miss discouraged investors. Consequently, the stock fell 1.4% in aftermarket trading on Sep 19.
The company’s earnings (excluding 32 cents from non-recurring items) of $2.51 per share significantly fell short of the Zacks Consensus Estimate of $3.17. Furthermore, the bottom line declined 13.5% on a year-over-year basis due to higher costs.
Quarterly revenues increased 4.3% year over year to $15,297 million, lagging the Zacks Consensus Estimate of $15,368.7 million. The top line was hurt primarily due to the TNT Express cyberattack.
Operating income (on an adjusted basis) decreased 6.8% year over year to $1.24 billion in the quarter primarily due to the cyberattack. Also, operating margin contracted to 8.1% during the quarter from 9.1% in first-quarter fiscal 2017.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) improved 2.2% to $8.65 billion, driven by hiked base rates and higher package volume. Operating income came in at $521 million, down 20.1% year over year, while operating margin reduced to 6% year over year. Operating results were hampered by the cyberattack.
FedEx Ground revenues gained 8% year over year to $4.64 billion in the fiscal first quarter. In fact, volume expansion and higher base rates aided the segmental performance during the reviewed quarter. Average daily volume rose 4% in the fiscal first quarter. Operating income came in at $626 million, up 3%. Operating margin declined 70 basis points (bps) to 13.5%.
FedEx Freight revenues rose 6% year over year to $1.75 billion. Segmental revenues were benefited by increased base rates and fuel surcharges. Also, the segment’s operating income surged 30% to $176 million. Plus, operating margin expanded 190 bps to 10%.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation Price, Consensus and EPS Surprise | FedEx Corporation Quote
Bleak Fiscal 2018 View
The company has lowered guidance for fiscal 2018due to concerning effect fromTNT Express cyberattack. It now expects earnings in the band of $11.05-$11.85 per share, excluding year-end MTM pension accounting adjustments.Previous outlook had called for a rise in the metric of $13.20-$14 per share. The Zacks Consensus Estimate for fiscal 2018 is currently pegged at $13.63 per share. Notably, the guidance assumes moderate economic growth and recovery from the cyberattack. Capital expenses are still projected at $5.9 billion.
Zacks Rank & Key Picks
FedEx currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Transportation sector are Air France-KLM SA (AFLYY - Free Report) , Deutsche Lufthansa AG (DLAKY - Free Report) and Canadian National Railway Company (CNI - Free Report) . While Deutsche Lufthansa sports a Zacks Rank #1 (Strong Buy), Air France-KLM and Canadian National Railway carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Air France-KLM and Deutsche Lufthansa have soared more than 100% in a year while Canadian National Railway shares have rallied 27.7% over the same time period.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>