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FDX has a disappointing surprise record with its earnings per share surpassing the Zacks Consensus Estimate in only one of the preceding four quarters while missing thrice. The average beat is 1.33%.
The Zacks Consensus Estimate for earnings per share has been revised 2.94% downward in the past 60 days.
Against this backdrop, let’s look into the factors that are likely to have impacted FedEx’s to-be-reported quarter’s performance.
Akin to fiscal second quarter, we expect persistent demand weakness, especially at FedEx Express, to have dented performance in the to-be-reported quarter. Also, macroeconomic weakness in Asia and service challenges in Europe are likely to affect the results of this segment.
The Zacks Consensus Estimate for segmental revenues suggests a 7.4% decline from the year-ago fiscal quarter’s reported number. Our estimate indicates a decline of 6.1% year over year.
Increased purchased transportation rates and lower package volume are likely to have affected the quarterly performance of the FedEx Ground segment. The Zacks Consensus Estimate for the segment’s revenues suggests a 1.3% decline from the year-ago fiscal quarter’s reported number. Our estimate indicates a decline of 3.7% year over year.
Softness pertaining to average daily shipments are likely to have hurt performance of the FedEx Freight segment as well.
However, increased fuel surcharge and the cost-control actions are likely to have aided FDX’s performance in the to-be-reported quarter.
What Does the Zacks Model Say?
The proven Zacks model does not conclusively 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 an earnings surprise. However, that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: FedEx has an Earnings ESP of -1.41% as the Most Accurate Estimate is pegged at $2.61, 3 cents lower than the Zacks Consensus Estimate. 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
FedEx's second-quarter fiscal 2023 (ended Nov 30, 2022) earnings (excluding 11 cents from non-recurring items) of $3.18 per share beat the Zacks Consensus Estimate of $2.77 but declined 34.2% year over year. Quarterly revenues of $22,814 million fell short of the Zacks Consensus Estimate of $23,662.9 million and decreased 2.8% from the year-ago fiscal quarter’s reported figure.
Recap of Recent Results From the Industry
Below we present the latest quarterly results of United Parcel Service (UPS - Free Report) and Air Transport Services (ATSG - Free Report) , which belong to the same industry as FedEx.
United Parcel Service’s fourth-quarter 2022 earnings of $3.62 per share beat the Zacks Consensus Estimate of $3.58 and improved 0.8% year over year. Revenues of $27,033 million fell short of the Zacks Consensus Estimate of $27,946.6 million and decreased 2.7% year over year.
UPS’ overall adjusted operating profit fell 3.3% year over year to $3,822 million in the fourth quarter. UPS generated $3,332 million of cash from operating activities in the fourth quarter. Capital expenditure was $2,491 million. Free cash flow was $566 million.
Air Transport Services’ fourth-quarter 2022 earnings of 53 cents per share missed the Zacks Consensus Estimate of 57 cents. However, the bottom line inched up 1.9% year over year. Revenues rose 10.5% year over year to $533 million and surpassed the Zacks Consensus Estimate of $520.1 million.
ATSG’s total operating expenses increased 14.4% to $460.5 million with fuel expenses increasing 30.1% as oil price rises. Adjusted EBITDA increased 5.1% year over year to $162.7 million. Operating cash flow decreased to $74.1 million from $1454.3 million a year ago.
Adjusted free cash flow was $32.6 million compared with $72.6 million a year ago. Capex was $56.5 million compared with $120.8 million in fourth-quarter 2021.
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FedEx (FDX) to Report Q3 Earnings: What's in the Offing?
FedEx Corporation (FDX - Free Report) is set to release third-quarter fiscal 2023 (ended Feb 28) results on Mar 16, after market close.
FDX has a disappointing surprise record with its earnings per share surpassing the Zacks Consensus Estimate in only one of the preceding four quarters while missing thrice. The average beat is 1.33%.
The Zacks Consensus Estimate for earnings per share has been revised 2.94% downward in the past 60 days.
Against this backdrop, let’s look into the factors that are likely to have impacted FedEx’s to-be-reported quarter’s performance.
Akin to fiscal second quarter, we expect persistent demand weakness, especially at FedEx Express, to have dented performance in the to-be-reported quarter. Also, macroeconomic weakness in Asia and service challenges in Europe are likely to affect the results of this segment.
The Zacks Consensus Estimate for segmental revenues suggests a 7.4% decline from the year-ago fiscal quarter’s reported number. Our estimate indicates a decline of 6.1% year over year.
Increased purchased transportation rates and lower package volume are likely to have affected the quarterly performance of the FedEx Ground segment. The Zacks Consensus Estimate for the segment’s revenues suggests a 1.3% decline from the year-ago fiscal quarter’s reported number. Our estimate indicates a decline of 3.7% year over year.
Softness pertaining to average daily shipments are likely to have hurt performance of the FedEx Freight segment as well.
However, increased fuel surcharge and the cost-control actions are likely to have aided FDX’s performance in the to-be-reported quarter.
What Does the Zacks Model Say?
The proven Zacks model does not conclusively 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 an earnings surprise. However, that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: FedEx has an Earnings ESP of -1.41% as the Most Accurate Estimate is pegged at $2.61, 3 cents lower than the Zacks Consensus Estimate. 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
FedEx's second-quarter fiscal 2023 (ended Nov 30, 2022) earnings (excluding 11 cents from non-recurring items) of $3.18 per share beat the Zacks Consensus Estimate of $2.77 but declined 34.2% year over year. Quarterly revenues of $22,814 million fell short of the Zacks Consensus Estimate of $23,662.9 million and decreased 2.8% from the year-ago fiscal quarter’s reported figure.
Recap of Recent Results From the Industry
Below we present the latest quarterly results of United Parcel Service (UPS - Free Report) and Air Transport Services (ATSG - Free Report) , which belong to the same industry as FedEx.
United Parcel Service’s fourth-quarter 2022 earnings of $3.62 per share beat the Zacks Consensus Estimate of $3.58 and improved 0.8% year over year. Revenues of $27,033 million fell short of the Zacks Consensus Estimate of $27,946.6 million and decreased 2.7% year over year.
UPS’ overall adjusted operating profit fell 3.3% year over year to $3,822 million in the fourth quarter. UPS generated $3,332 million of cash from operating activities in the fourth quarter. Capital expenditure was $2,491 million. Free cash flow was $566 million.
Air Transport Services’ fourth-quarter 2022 earnings of 53 cents per share missed the Zacks Consensus Estimate of 57 cents. However, the bottom line inched up 1.9% year over year. Revenues rose 10.5% year over year to $533 million and surpassed the Zacks Consensus Estimate of $520.1 million.
ATSG’s total operating expenses increased 14.4% to $460.5 million with fuel expenses increasing 30.1% as oil price rises. Adjusted EBITDA increased 5.1% year over year to $162.7 million. Operating cash flow decreased to $74.1 million from $1454.3 million a year ago.
Adjusted free cash flow was $32.6 million compared with $72.6 million a year ago. Capex was $56.5 million compared with $120.8 million in fourth-quarter 2021.