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FedEx (FDX) Gains More Than 4% on Q3 Earnings & Revenue Beat
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FedEx Corporation (FDX - Free Report) reported strong third-quarter fiscal 2021 (ended Feb 28, 2021) results despite severe winter affecting performance in February. Following this, shares of the company rose 4.4% in after-hours trading on Mar 18.
The company’s earnings (excluding 17 cents from non-recurring items) of $3.47 per share surpassed the Zacks Consensus Estimate of $3.21. The bottom line surged more than 100% year over year, driven by increased volumes at FedEx International Priority and U.S. domestic residential package services, as well as pricing initiatives across all transportation segments.
Quarterly revenues of $21,510 million outperformed the Zacks Consensus Estimate of $19,970.9 million and increased 23% year over year, primarily owing to higher volumes, thanks to coronavirus-driven increased demand for e-commerce. Operating income (on an adjusted basis) soared more than 100% year over year to $1.06 billion in the reported quarter due to pandemic-driven rise in demand for residential delivery services as well yield improvement. Operating margin (adjusted) also improved to 4.9% from 2.8% in the year-ago period.
FedEx Corporation Price, Consensus and EPS Surprise
Quarterly revenues at FedEx Express (including TNT Express) ascended 20.9% to $10.79 billion due to international export and U.S. domestic-package volume growth. Segmental operating income increased to $463 million from $137 million in the year-ago period. Also, segmental operating margin improved to 4.3% from 1.5% in third-quarter fiscal 2020.
FedEx Ground revenues surged 36.5% year over year to $7,980 million in the period under consideration, owing to residential delivery volume growth. Operating income came in at $702 million, augmenting 97.7% year over year. Segmental operating margin also improved to 8.8% from 6.1% in the prior-year quarter.
FedEx Freight revenues climbed 5.6% year over year to $1,836 million due to higher revenues per shipment and average daily shipments. The segment’s operating income ascended 5.3% to $119 million, thanks to focus on revenue qualitative initiatives. Operating margin was flat at 6.5%.
Outlook
For fiscal 2021, FedEx anticipates earnings per share, before the year-end MTM retirement plan accounting adjustment and debt-refinancing costs, in the band of $16.80-$17.40. The mid-point — $17.1 — of the guided range lies below the Zacks Consensus Estimate of $17.33.
Additionally, the company estimates fiscal 2021 earnings per share in the range of $17.60-$18.20, before the year-end MTM retirement plan accounting adjustment and debt-refinancing costs, and excluding TNT Express integration expenses, costs associated with business realignment activities and the second-quarter fiscal 2021 MTM TNT Express retirement plan accounting adjustment.
Effective tax rate, before the year-end MTM retirement plan accounting adjustment, is expected between 21-22%. Meanwhile, capital expenditures are predicted to be $5.7 billion in fiscal 2021, higher than $5.1 billion anticipated previously, due to acceleration in FedEx Ground capacity expansion initiatives among other factors.
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FedEx (FDX) Gains More Than 4% on Q3 Earnings & Revenue Beat
FedEx Corporation (FDX - Free Report) reported strong third-quarter fiscal 2021 (ended Feb 28, 2021) results despite severe winter affecting performance in February. Following this, shares of the company rose 4.4% in after-hours trading on Mar 18.
The company’s earnings (excluding 17 cents from non-recurring items) of $3.47 per share surpassed the Zacks Consensus Estimate of $3.21. The bottom line surged more than 100% year over year, driven by increased volumes at FedEx International Priority and U.S. domestic residential package services, as well as pricing initiatives across all transportation segments.
Quarterly revenues of $21,510 million outperformed the Zacks Consensus Estimate of $19,970.9 million and increased 23% year over year, primarily owing to higher volumes, thanks to coronavirus-driven increased demand for e-commerce. Operating income (on an adjusted basis) soared more than 100% year over year to $1.06 billion in the reported quarter due to pandemic-driven rise in demand for residential delivery services as well yield improvement. Operating margin (adjusted) also improved to 4.9% from 2.8% in the year-ago period.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation Quote
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) ascended 20.9% to $10.79 billion due to international export and U.S. domestic-package volume growth. Segmental operating income increased to $463 million from $137 million in the year-ago period. Also, segmental operating margin improved to 4.3% from 1.5% in third-quarter fiscal 2020.
FedEx Ground revenues surged 36.5% year over year to $7,980 million in the period under consideration, owing to residential delivery volume growth. Operating income came in at $702 million, augmenting 97.7% year over year. Segmental operating margin also improved to 8.8% from 6.1% in the prior-year quarter.
FedEx Freight revenues climbed 5.6% year over year to $1,836 million due to higher revenues per shipment and average daily shipments. The segment’s operating income ascended 5.3% to $119 million, thanks to focus on revenue qualitative initiatives. Operating margin was flat at 6.5%.
Outlook
For fiscal 2021, FedEx anticipates earnings per share, before the year-end MTM retirement plan accounting adjustment and debt-refinancing costs, in the band of $16.80-$17.40. The mid-point — $17.1 — of the guided range lies below the Zacks Consensus Estimate of $17.33.
Additionally, the company estimates fiscal 2021 earnings per share in the range of $17.60-$18.20, before the year-end MTM retirement plan accounting adjustment and debt-refinancing costs, and excluding TNT Express integration expenses, costs associated with business realignment activities and the second-quarter fiscal 2021 MTM TNT Express retirement plan accounting adjustment.
Effective tax rate, before the year-end MTM retirement plan accounting adjustment, is expected between 21-22%. Meanwhile, capital expenditures are predicted to be $5.7 billion in fiscal 2021, higher than $5.1 billion anticipated previously, due to acceleration in FedEx Ground capacity expansion initiatives among other factors.
Zacks Rank & Key Picks
FedEx carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are ArcBest Corp. (ARCB - Free Report) , Saia, Inc. (SAIA - Free Report) and Mesa Air Group, Inc. (MESA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of ArcBest, Saia and Mesa Air have rallied more than 100%, 85% and 300% in the past six months, respectively.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>