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) Drops 16.58% on Dismal Q1 Preliminary Results
Read MoreHide Full Article
FedEx Corporation (FDX - Free Report) reported dismal preliminary results for first-quarter fiscal 2023 (ended Aug 31, 2022), citing global volume softness. The headwind worsened in the final weeks of the quarter.
As a result of the prevalent woes, FedEx withdrew its earnings guidance for fiscal 2023, which was provided in June. The unimpressive preliminary results induced the FedEx stock to lose 16.58% of its value in after-hours trading on Sep 15, 2022. Detailed earnings results will be announced on Sep 22, 2022.
Per the preliminary results, FedEx expects first-quarter adjusted earnings per share to be $3.44, well below Zacks Consensus Estimate of $5.06. Revenues for the fiscal first quarter are expected to come in at $23.2 billion, when the detailed results are released next week. This is also below the Zacks Consensus Estimate of $23.68 billion.
Macroeconomic weakness in Asia and service challenges in Europe are likely to hurt results of the FedEx Express segment. Segmental revenues are expected to be $11.1 billion, indicating a decline from the Zacks Consensus Estimate of $11.5 billion. Revenues for FedEx Ground are also expected to be roughly $300 million below management’s forecasts. Even though FDX took immediate actions to tweak its cost base, volumes declined, as evident from the disastrous preliminary results.
Per Raj Subramaniam, FedEx’s president and chief executive officer, “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations”.
Among the cost-control actions undertaken to mitigate the effects of reduced demand, FedEx intends to defer staff hiring, cancel planned network capacity and other projects, and reduce flight frequencies. Moreover, FDX aims to close down 90 offices.
Anticipating the weakness to persist in the fiscal second quarter as well, FedExexpects revenues in the $23.5-$24 billion range. The Zacks Consensus Estimate is currently pegged at $24.81 billion. Second-quarter earnings per share (excluding costs related to business optimization initiatives and business realignment activities) are likely to be $2.75 or greater. The Zacks Consensus Estimate is currently pegged at $5.62. FDX anticipates capital spending of $6.3 billion in fiscal 2023 (earlier guidance was $6.8 billion).
FDX, currently carrying a Zacks Rank #3 (Hold), reaffirmed its plan to repurchase $1.5 billion of its common stock in fiscal 2023. FedEx expects to buy back shares worth $1 billion during the fiscal second quarter.
The dismal preliminary results of FedEx hurt shares of its rival United Parcel Service (UPS - Free Report) as well. Shares of UPS declined more than 3% in after-hours trading yesterday.
UPS currently carries a Zacks Rank of 3. Driven by upbeat e-commerce demand, UPS’ earnings outshined the Zacks Consensus Estimate in each of the last four quarters, the average being 8.51%. UPS is scheduled to release third-quarter 2022 results on Oct 25.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are Triton International and C.H. Robinson (CHRW - Free Report) .
Triton is being aided by the gradual increase in trade volumes and container demand. TRTN expects container demand to remain strong throughout 2022. Measures to reward its shareholders through dividends and buybacks instill confidence in the stock.
Triton has an expected earnings growth rate of 22.4% for the current year. TRTN’s bottom line outpaced the Zacks Consensus Estimate in each of the last four quarters, the average being 7.5%. TRTN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
C.H. Robinson is being aided by an improving freight scenario in the United States. Efforts to control costs also bode well. Measures to reward its shareholders instill confidence in the stock.
CHRW has a pleasant earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one). The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 17.6% upward over the past 60 days. C.H. Robinson currently carries a Zacks Rank of 2.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
FedEx (FDX) Drops 16.58% on Dismal Q1 Preliminary Results
FedEx Corporation (FDX - Free Report) reported dismal preliminary results for first-quarter fiscal 2023 (ended Aug 31, 2022), citing global volume softness. The headwind worsened in the final weeks of the quarter.
As a result of the prevalent woes, FedEx withdrew its earnings guidance for fiscal 2023, which was provided in June. The unimpressive preliminary results induced the FedEx stock to lose 16.58% of its value in after-hours trading on Sep 15, 2022. Detailed earnings results will be announced on Sep 22, 2022.
Per the preliminary results, FedEx expects first-quarter adjusted earnings per share to be $3.44, well below Zacks Consensus Estimate of $5.06. Revenues for the fiscal first quarter are expected to come in at $23.2 billion, when the detailed results are released next week. This is also below the Zacks Consensus Estimate of $23.68 billion.
Macroeconomic weakness in Asia and service challenges in Europe are likely to hurt results of the FedEx Express segment. Segmental revenues are expected to be $11.1 billion, indicating a decline from the Zacks Consensus Estimate of $11.5 billion. Revenues for FedEx Ground are also expected to be roughly $300 million below management’s forecasts. Even though FDX took immediate actions to tweak its cost base, volumes declined, as evident from the disastrous preliminary results.
Per Raj Subramaniam, FedEx’s president and chief executive officer, “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations”.
Among the cost-control actions undertaken to mitigate the effects of reduced demand, FedEx intends to defer staff hiring, cancel planned network capacity and other projects, and reduce flight frequencies. Moreover, FDX aims to close down 90 offices.
Anticipating the weakness to persist in the fiscal second quarter as well, FedExexpects revenues in the $23.5-$24 billion range. The Zacks Consensus Estimate is currently pegged at $24.81 billion. Second-quarter earnings per share (excluding costs related to business optimization initiatives and business realignment activities) are likely to be $2.75 or greater. The Zacks Consensus Estimate is currently pegged at $5.62. FDX anticipates capital spending of $6.3 billion in fiscal 2023 (earlier guidance was $6.8 billion).
FDX, currently carrying a Zacks Rank #3 (Hold), reaffirmed its plan to repurchase $1.5 billion of its common stock in fiscal 2023. FedEx expects to buy back shares worth $1 billion during the fiscal second quarter.
The dismal preliminary results of FedEx hurt shares of its rival United Parcel Service (UPS - Free Report) as well. Shares of UPS declined more than 3% in after-hours trading yesterday.
UPS currently carries a Zacks Rank of 3. Driven by upbeat e-commerce demand, UPS’ earnings outshined the Zacks Consensus Estimate in each of the last four quarters, the average being 8.51%. UPS is scheduled to release third-quarter 2022 results on Oct 25.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are Triton International and C.H. Robinson (CHRW - Free Report) .
Triton is being aided by the gradual increase in trade volumes and container demand. TRTN expects container demand to remain strong throughout 2022. Measures to reward its shareholders through dividends and buybacks instill confidence in the stock.
Triton has an expected earnings growth rate of 22.4% for the current year. TRTN’s bottom line outpaced the Zacks Consensus Estimate in each of the last four quarters, the average being 7.5%. TRTN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
C.H. Robinson is being aided by an improving freight scenario in the United States. Efforts to control costs also bode well. Measures to reward its shareholders instill confidence in the stock.
CHRW has a pleasant earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one). The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 17.6% upward over the past 60 days. C.H. Robinson currently carries a Zacks Rank of 2.