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FedEx (FDX) Beats on Q2 Earnings & Revenues, Stock Gains
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FedEx Corporation (FDX - Free Report) reported better-than-expected results in the second quarter of fiscal 2018 (ended Nov 30, 2017) driven by increased package volumes during the peak holiday season. However, performance in the period has also been affected by the TNT Express cyberattack in June.
The earnings and revenue beat pleased investors. As a result, the stock gained 1.8% in afterhours trading on Dec 19.
The company’s earnings (excluding 33 cents from non-recurring items) of $3.18 per share comfortably surpassed the Zacks Consensus Estimate of $2.87. Furthermore, the bottom line climbed 13.6% on a year-over-year basis.
Quarterly revenues increased 9.3% year over year to $16,313 million, beating the Zacks Consensus Estimate of $15,672.4 million.
Operating income (on an adjusted basis) increased 12.2% year over year to $1.38 billion in the quarter. Also, operating margin expanded 3.7% during the quarter under review from 8.2% in second-quarter fiscal 2017.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) improved 8.2% to $9.35 billion, driven by hiked base rates and fuel surcharges plus strong growth in international services as well as favorable exchange rates. Operating income came in at $813 million, up 10.8% year over year while operating margin increased to 8.7% year over year. Operating income rose on higher revenues. However, it is inclusive of an estimated impact of $100 million from the cyberattack.
FedEx Ground revenues grew 12% year over year to $4.93 billion in the fiscal second quarter. Volume expansion and higher base rates aided the segmental performance during the reported quarter. Average daily volume climbed 7% in the fiscal second quarter. Operating income came in at $521 million, up 12%. Operating margin improved 10 basis points (bps) to 10.6%.
FedEx Freight revenues jumped 10% year over year to $1.76 billion. Segmental revenues were benefited by less-than-truckload (LTL) revenues per shipment growth of 7% and average daily LTL shipment growth of 4%. Also, the segment’s operating income surged 34% to $118 million. Plus, the operating margin expanded 120 bps to 6.7%.
FedEx Corporation Price, Consensus and EPS Surprise
The company has raised the guidance for fiscal 2018 owing to higher revenues and strong demand. FedEx has also been successful in recouping its lost revenues from the cyberattack. The company expects further improvement in the second half of the fiscal and reiterates its commitment to increase operating income by $1.2-$1.5 billion in fiscal 2020.
For fiscal 2018, the company estimates earnings per share (excluding TNT Express integration expenses and certain other items) in the range of $12.70-$13.30, higher than the previous projection of $12-$12.80. Notably, the view assumes moderate economic growth and recovery from the cyberattack. Moreover, this view could improve in the event of the proposed tax overhaul becoming a law. The Zacks Consensus Estimate for fiscal 2018 earnings stands at $12.47 per share.
The company estimates effective tax rate of 33% to 34% for fiscal 2018, according to current U.S. tax laws. Capital expenses are still anticipated at $5.9 billion.
Zacks Rank & Key Picks
FedEx carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Gol Linhas Aereas Inteligentes S.A. , Deutsche Lufthansa AG (DLAKY - Free Report) and International Consolidated Airlines Group SA (ICAGY - Free Report) . While Gol Linhas sports a Zacks Rank #1 (Strong Buy), Deutsche Lufthansa and International Consolidated Airlines carry a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Shares of Gol Linhas, Deutsche Lufthansa and International Consolidated Airlines have surged more than 200%, 100% and 54%, respectively, in a year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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FedEx (FDX) Beats on Q2 Earnings & Revenues, Stock Gains
FedEx Corporation (FDX - Free Report) reported better-than-expected results in the second quarter of fiscal 2018 (ended Nov 30, 2017) driven by increased package volumes during the peak holiday season. However, performance in the period has also been affected by the TNT Express cyberattack in June.
The earnings and revenue beat pleased investors. As a result, the stock gained 1.8% in afterhours trading on Dec 19.
The company’s earnings (excluding 33 cents from non-recurring items) of $3.18 per share comfortably surpassed the Zacks Consensus Estimate of $2.87. Furthermore, the bottom line climbed 13.6% on a year-over-year basis.
Quarterly revenues increased 9.3% year over year to $16,313 million, beating the Zacks Consensus Estimate of $15,672.4 million.
Operating income (on an adjusted basis) increased 12.2% year over year to $1.38 billion in the quarter. Also, operating margin expanded 3.7% during the quarter under review from 8.2% in second-quarter fiscal 2017.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) improved 8.2% to $9.35 billion, driven by hiked base rates and fuel surcharges plus strong growth in international services as well as favorable exchange rates. Operating income came in at $813 million, up 10.8% year over year while operating margin increased to 8.7% year over year. Operating income rose on higher revenues. However, it is inclusive of an estimated impact of $100 million from the cyberattack.
FedEx Ground revenues grew 12% year over year to $4.93 billion in the fiscal second quarter. Volume expansion and higher base rates aided the segmental performance during the reported quarter. Average daily volume climbed 7% in the fiscal second quarter. Operating income came in at $521 million, up 12%. Operating margin improved 10 basis points (bps) to 10.6%.
FedEx Freight revenues jumped 10% year over year to $1.76 billion. Segmental revenues were benefited by less-than-truckload (LTL) revenues per shipment growth of 7% and average daily LTL shipment growth of 4%. Also, the segment’s operating income surged 34% to $118 million. Plus, the operating margin expanded 120 bps to 6.7%.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation Price, Consensus and EPS Surprise | FedEx Corporation Quote
Bullish Fiscal 2018 Outlook
The company has raised the guidance for fiscal 2018 owing to higher revenues and strong demand. FedEx has also been successful in recouping its lost revenues from the cyberattack. The company expects further improvement in the second half of the fiscal and reiterates its commitment to increase operating income by $1.2-$1.5 billion in fiscal 2020.
For fiscal 2018, the company estimates earnings per share (excluding TNT Express integration expenses and certain other items) in the range of $12.70-$13.30, higher than the previous projection of $12-$12.80. Notably, the view assumes moderate economic growth and recovery from the cyberattack. Moreover, this view could improve in the event of the proposed tax overhaul becoming a law. The Zacks Consensus Estimate for fiscal 2018 earnings stands at $12.47 per share.
The company estimates effective tax rate of 33% to 34% for fiscal 2018, according to current U.S. tax laws. Capital expenses are still anticipated at $5.9 billion.
Zacks Rank & Key Picks
FedEx carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Gol Linhas Aereas Inteligentes S.A. , Deutsche Lufthansa AG (DLAKY - Free Report) and International Consolidated Airlines Group SA (ICAGY - Free Report) . While Gol Linhas sports a Zacks Rank #1 (Strong Buy), Deutsche Lufthansa and International Consolidated Airlines carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Gol Linhas, Deutsche Lufthansa and International Consolidated Airlines have surged more than 200%, 100% and 54%, respectively, in a year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>