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Is a Beat in the Cards for FedEx (FDX) Stock in Q3 Earnings?
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FedEx Corporation (FDX - Free Report) is set to release third-quarter fiscal 2018 results, after the closing bell on Mar 20.
Last quarter, the company posted a positive earnings surprise of 10.8%. It reported better-than-expected results owing to increased package volumes during the peak holiday season. Both the top as well as the bottom line increased 9.3% and 13.6%, respectively, in the second quarter.
Let’s see how things are shape up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that FedEx is likely to beat on earnings this quarter because it has the perfect combination of the following two key ingredients:
Zacks ESP: FedEx has an Earnings ESP of +2.20%, representing the percentage difference between the Most Accurate estimate of $3.13 per share and the Zacks Consensus Estimate, pegged lower at $3.06. A favourable Zacks ESP is indicative of a likely positive earnings surprise. 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 (Hold). Note that the stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Together with a positive ESP, the combination makes us reasonably confident of an earnings beat.
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
Strong growth of e-commerce is likely to boost results in the third quarter. The Zacks Consensus Estimate for revenues at the FedEx Express (including TNT Express) division stands at $9,127 million, much above the year-ago reported figure of $6,779 million. For Ground and Freight revenues, the consensus mark is pegged at $5,170 million and $1,612 million, respectively, greater than the year-ago figures of $4,688 million and $1,492 million.
The new tax law, which reduces corporate tax rate significantly, is a huge positive for transportation stocks and FedEx is no exception. With decreased corporate taxes, the company’s bottom line is likely to get a boost in the to-be-reported quarter.
Additionally, the company has hiked shipping rates since January 2018. Notably, FedEx Express, Ground, Freight and Home Delivery shipping rates in the United States have been increased by an average of 4.9%. This move is in turn anticipated to aid the company’s top line in the period to be reported.
However, high costs are likely to hurt the company’s bottom line in the third quarter. Significant investments at the company's Ground unit have been pushing up costs. Moreover, the company’s high debt-levels are a cause for worry.
Other Stocks to Consider
Investors interested in the broader Transportation sector may also consider the following stocks, which have the right combination of elements to deliver an earnings beat in the upcoming releases:
Allegiant Travel Company (ALGT - Free Report) has an Earnings ESP of +3.11% and a Zacks Rank of 3.
United Parcel Service, Inc. (UPS - Free Report) is also a #3 Ranked player and has an Earnings ESP of +1.45%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Is a Beat in the Cards for FedEx (FDX) Stock in Q3 Earnings?
FedEx Corporation (FDX - Free Report) is set to release third-quarter fiscal 2018 results, after the closing bell on Mar 20.
Last quarter, the company posted a positive earnings surprise of 10.8%. It reported better-than-expected results owing to increased package volumes during the peak holiday season. Both the top as well as the bottom line increased 9.3% and 13.6%, respectively, in the second quarter.
Let’s see how things are shape up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that FedEx is likely to beat on earnings this quarter because it has the perfect combination of the following two key ingredients:
Zacks ESP: FedEx has an Earnings ESP of +2.20%, representing the percentage difference between the Most Accurate estimate of $3.13 per share and the Zacks Consensus Estimate, pegged lower at $3.06. A favourable Zacks ESP is indicative of a likely positive earnings surprise. 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 (Hold). Note that the stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Together with a positive ESP, the combination makes us reasonably confident of an earnings beat.
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
FedEx Corporation Price and EPS Surprise
FedEx Corporation Price and EPS Surprise | FedEx Corporation Quote
What is Driving Better-Than-Expected Earnings?
Strong growth of e-commerce is likely to boost results in the third quarter. The Zacks Consensus Estimate for revenues at the FedEx Express (including TNT Express) division stands at $9,127 million, much above the year-ago reported figure of $6,779 million. For Ground and Freight revenues, the consensus mark is pegged at $5,170 million and $1,612 million, respectively, greater than the year-ago figures of $4,688 million and $1,492 million.
The new tax law, which reduces corporate tax rate significantly, is a huge positive for transportation stocks and FedEx is no exception. With decreased corporate taxes, the company’s bottom line is likely to get a boost in the to-be-reported quarter.
Additionally, the company has hiked shipping rates since January 2018. Notably, FedEx Express, Ground, Freight and Home Delivery shipping rates in the United States have been increased by an average of 4.9%. This move is in turn anticipated to aid the company’s top line in the period to be reported.
However, high costs are likely to hurt the company’s bottom line in the third quarter. Significant investments at the company's Ground unit have been pushing up costs. Moreover, the company’s high debt-levels are a cause for worry.
Other Stocks to Consider
Investors interested in the broader Transportation sector may also consider the following stocks, which have the right combination of elements to deliver an earnings beat in the upcoming releases:
American Airlines Group Inc. (AAL - Free Report) has an Earnings ESP of +17.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allegiant Travel Company (ALGT - Free Report) has an Earnings ESP of +3.11% and a Zacks Rank of 3.
United Parcel Service, Inc. (UPS - Free Report) is also a #3 Ranked player and has an Earnings ESP of +1.45%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>