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FedEx (FDX) to Report Q1 Earnings: What's in the Offing?

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FedEx Corporation (FDX - Free Report) is set to release first-quarter fiscal 2022 (ended Aug 31, 2021) results on Sep 21, after market close.

The Zacks Consensus Estimate for earnings in the fiscal first quarter has been revised 2.17% downward in the past 60 days. However, the company shows a pleasant earnings history, having outperformed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 29.85%.

FedEx Corporation Price and EPS Surprise

FedEx Corporation Price and EPS Surprise

FedEx Corporation price-eps-surprise | FedEx Corporation Quote

Against this backdrop, let’s take a look at the factors that are likely to have impacted the company’s first-quarter fiscal 2022 performance.

The rapid spread of the Delta variant of COVID-19 might have hurt FedEx’s performance in the fiscal first quarter as it stunted economic growth that was visible prior to the spread of the highly contagious strain. Despite the spread of the Delta strain in the United States, people are venturing out as a high proportion of the population is vaccinated. This is likely to have dented the company’s overall shipment volume at its Ground unit.

The Zacks Consensus Estimate for revenues in the fiscal first quarter at the FedEx Ground unit, which handles e-commerce deliveries for many retailers, stands at $7,968 million, indicating a sequential decrease of 2%. Similarly, the consensus mark for Freight segment’s revenues is currently pegged at $2,195 million, suggesting a 1.8% dip, sequentially. In fact, this decline in shipments is also likely to hurt other players in the industry like United Parcel Service (UPS - Free Report) , Atlas Air Worldwide (AAWW - Free Report) and Air Transport Services Group (ATSG - Free Report) .

Additionally, costs are likely to have been high in the to-be-reported quarter at FedEx due to escalated TNT Express integration expenses and increased labor rates. This, in turn, is expected to have limited the bottom-line performance.

Despite the likely sequential decline, Ground unit revenues are expected to have been strong from the year-ago quarter’s reported figure owing to the overall strength of the e-commerce business. Evidently, the Zacks Consensus Estimate for the to-be-reported quarter’s revenues at the FedEx Ground unit indicates a 13.2%increase from the year-ago period’s reported number.

Earnings Whispers

The proven Zacks model does not predict 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 surprise. However, this is not the case here as shown below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: FedEx has an Earnings ESP of -8.54% as the Most Accurate Estimate is pegged at $4.54, lower than the Zacks Consensus Estimate of $4.96. 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 Q4 Earnings

n the fourth quarter of fiscal 2021, the company’s earnings (excluding $1.87 from non-recurring items) of $5.01 per share missed the Zacks Consensus Estimate of $5.04. The bottom line surged approximately 98% year over year, driven by higher revenues across all segments. Quarterly revenues of $22,565 million outperformed the Zacks Consensus Estimate of $21,744.9 million and improved 30% year over year, primarily owing to volume expansion, courtesy of the coronavirus-driven rise in demand for package delivery and freight services.