We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
FedEx (FDX) Down on Q2 Earnings Miss & Bearish FY2020 View
Read MoreHide Full Article
FedEx Corporation (FDX - Free Report) reported lower-than-expected second-quarter fiscal 2020 (ended Nov 30, 2019) results on account of weak global economy due to escalating trade tensions, higher costs at the Ground unit and loss of business with Amazon (AMZN - Free Report) . Simultaneously, the company slashed its fiscal 2020 adjusted earnings outlook on expectations of lower revenues at each of the transportation segments and increased costs due to expansion of 7-day delivery service at the Ground unit (the Ground unit costs are expected to be reduced in the fiscal fourth quarter).
The company’s underperformance and its guidance cut made investors jittery. Consequently, the stock declined more than 6% in after-hours trading on Dec 17.
FedEx’s earnings (prior to the year-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses) are now anticipated to be $10.25-$11.50 per share. The Zacks Consensus Estimate for the same stands at $11.97. Previously, during the first quarter of fiscal 2020 earnings release, the company trimmed its fiscal 2020 earnings view to $11-$13.
FedEx Corporation Price, Consensus and EPS Surprise
The company’s second-quarter fiscal 2020 adjusted earnings (excluding 38 cents from non-recurring items) of $2.51 per share missed the Zacks Consensus Estimate of $2.79. Moreover, the bottom line plunged 37.7% year over year.
Quarterly revenues dipped 2.8% year over year to $17.32 billion and also lagged the Zacks Consensus Estimate of $17.57 billion. The top line was hampered by loss of business “from a large customer” (supposedly Amazon) and macroeconomic weakness.
Operating income (on an adjusted basis) dropped approximately 49% year over year to $684 million in the reported quarter due to sluggish global economy and elevated costs. Operating margin (adjusted) also deteriorated to 3.9% from 7.5% in the year-ago period.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) slid 5% to $9.08 billion due to lower freight revenues as a result of the slowdown in global economy and certain other factors. Operating income came in at $236 million, down 63% year over year. Also, operating margin slipped to 2.6% from 6.6% in the year-ago quarter.
FedEx Ground revenues rose 3% year over year to $5.32 billion in the period under consideration owing to residential delivery volume growth. Operating income came in at $342 million, slumping 42% year over year while operating margin contracted to 6.4% from 11.5% in the prior-year quarter.
FedEx Freight revenues decreased 4% year over year to $1.84 billion. Segmental revenues were hurt by a fall in average daily shipments. The segment’s operating income also slipped 5% to $141 million. Moreover, operating margin contracted 10 basis points to 7.6% in the quarter under review.
Fiscal 2020 Outlook
Effective tax rate (prior to the year-end MTM retirement plan accounting adjustment) is now estimated to be 23-26% compared with 24-26% anticipated previously. Meanwhile, the estimate for capital expenditures is fixed at $5.9 billion. The company expects to incur heavy TNT Express integration expenses through fiscal 2021 and thereafter.
Shares of Allegiant and GATX have rallied more than 50% and 14%, respectively, in a year.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.
Image: Bigstock
FedEx (FDX) Down on Q2 Earnings Miss & Bearish FY2020 View
FedEx Corporation (FDX - Free Report) reported lower-than-expected second-quarter fiscal 2020 (ended Nov 30, 2019) results on account of weak global economy due to escalating trade tensions, higher costs at the Ground unit and loss of business with Amazon (AMZN - Free Report) . Simultaneously, the company slashed its fiscal 2020 adjusted earnings outlook on expectations of lower revenues at each of the transportation segments and increased costs due to expansion of 7-day delivery service at the Ground unit (the Ground unit costs are expected to be reduced in the fiscal fourth quarter).
The company’s underperformance and its guidance cut made investors jittery. Consequently, the stock declined more than 6% in after-hours trading on Dec 17.
FedEx’s earnings (prior to the year-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses) are now anticipated to be $10.25-$11.50 per share. The Zacks Consensus Estimate for the same stands at $11.97. Previously, during the first quarter of fiscal 2020 earnings release, the company trimmed its fiscal 2020 earnings view to $11-$13.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation Quote
Results in Detail
The company’s second-quarter fiscal 2020 adjusted earnings (excluding 38 cents from non-recurring items) of $2.51 per share missed the Zacks Consensus Estimate of $2.79. Moreover, the bottom line plunged 37.7% year over year.
Quarterly revenues dipped 2.8% year over year to $17.32 billion and also lagged the Zacks Consensus Estimate of $17.57 billion. The top line was hampered by loss of business “from a large customer” (supposedly Amazon) and macroeconomic weakness.
Operating income (on an adjusted basis) dropped approximately 49% year over year to $684 million in the reported quarter due to sluggish global economy and elevated costs. Operating margin (adjusted) also deteriorated to 3.9% from 7.5% in the year-ago period.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) slid 5% to $9.08 billion due to lower freight revenues as a result of the slowdown in global economy and certain other factors. Operating income came in at $236 million, down 63% year over year. Also, operating margin slipped to 2.6% from 6.6% in the year-ago quarter.
FedEx Ground revenues rose 3% year over year to $5.32 billion in the period under consideration owing to residential delivery volume growth. Operating income came in at $342 million, slumping 42% year over year while operating margin contracted to 6.4% from 11.5% in the prior-year quarter.
FedEx Freight revenues decreased 4% year over year to $1.84 billion. Segmental revenues were hurt by a fall in average daily shipments. The segment’s operating income also slipped 5% to $141 million. Moreover, operating margin contracted 10 basis points to 7.6% in the quarter under review.
Fiscal 2020 Outlook
Effective tax rate (prior to the year-end MTM retirement plan accounting adjustment) is now estimated to be 23-26% compared with 24-26% anticipated previously. Meanwhile, the estimate for capital expenditures is fixed at $5.9 billion. The company expects to incur heavy TNT Express integration expenses through fiscal 2021 and thereafter.
Zacks Rank & Key Picks
FedEx carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Allegiant Travel Company (ALGT - Free Report) and GATX Corporation (GATX - Free Report) . While Allegiant sports a Zacks Rank #1 (Strong Buy), GATX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Allegiant and GATX have rallied more than 50% and 14%, respectively, in a year.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.
See 7 handpicked stocks now >>