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Will Strong E-commerce Demand Buoy FedEx's (FDX) Q3 Earnings?

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FedEx Corporation (FDX - Free Report) is set to release third-quarter fiscal 2021 (ended Feb 28, 2021) results on Mar 18, 2021, after market close.

The Zacks Consensus Estimate for fiscal third-quarter earnings has been revised upward by 18.5% in the last 90 days. Moreover, the company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, the average beat being 46.2%.

Against this backdrop, let’s take a look at the factors that are likely to have influenced the company’s third-quarter fiscal 2021 performance.

The coronavirus-driven rise in e-commerce demand and door-to-door delivery services is expected to have aided FedEx’s performance in the to-be-reported quarter. The Ground unit, which handles e-commerce deliveries for many retailers, is expected to have benefited from higher residential delivery volume growth. Notably, the Zacks Consensus Estimate for Ground revenues in the fiscal third quarter suggests a 28.1% surge from the year-ago reported number. Moreover, the December 2020 acquisition of ShopRunner, aimed at boosting the company’s e-commerce offerings, is likely to have contributed to FedEx’s top line.
 
FedEx’s rival, United Parcel Service (UPS - Free Report) , is also reaping significant benefits from this e-commerce boom. Other transportation companies like Atlas Air Worldwide Holdings and Air Transport Services Group (ATSG - Free Report) are gaining from this upbeat scenario as well.

As for FedEx’s upcoming quarterly results, the Express segment is anticipated to have generated higher revenues on the back of international export and U.S. domestic-package volume growth, as was the case in the last reported quarter. The consensus mark for Express revenues indicates a 9.7% rise from the third-quarter fiscal 2020 reported figure.

However, the company’s Freight segment might reflect some softness due to coronavirus-induced low average daily shipments.

Additionally, significant expenses on TNT Express integration and costs incurred to support strong demand and expand services might have partly offset FedEx’s bottom-line growth in the soon-to-be-reported quarter.

FedEx Corporation Price and EPS Surprise

 

FedEx Corporation Price and EPS Surprise

FedEx Corporation price-eps-surprise | FedEx Corporation Quote

Earnings Whispers

The proven Zacks model predicts an earnings beat for FedEx this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: FedEx has an Earnings ESP of +2.72% as the Most Accurate Estimate is pegged at $3.36, higher than the Zacks Consensus Estimate of $3.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: FedEx currently carries a Zacks Rank #3.

Highlights of Q2 Earnings

In the last reported quarter, FedEx delivered an earnings surprise of 23.8%. Quarterly revenues also outperformed the Zacks Consensus Estimate. Both the top and bottom lines increased year over year, primarily owing to robust performance of the FedEx Ground segment.

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