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FedEx (FDX) to Report Q1 Earnings: Is a Beat in the Offing?

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FedEx Corporation (FDX - Free Report) is set to release first-quarter fiscal 2024 (ended Aug 31, 2023) results on Sep 20, 2023 after market close.

FDX has a decent surprise record, with its earnings per share surpassing the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark once). The average beat is 9.51%.

FedEx Corporation Price and EPS Surprise


FedEx Corporation Price and EPS Surprise

FedEx Corporation price-eps-surprise | FedEx Corporation Quote


Given this backdrop, let's examine the factors likely to have influenced FedEx’s performance in the soon-to-be-reported quarter.

Like the past few quarters, we believe lackluster shipping demand will likely hurt FedEx’s performance in first-quarter fiscal 2024. The performance of the Express unit, FDX's largest segment, is likely to have been severely hurt due to the demand-induced volume weakness.  We expect revenues from the Express unit to be down 10.9% from the first-quarter fiscal 2023 actuals.

To navigate the weaker-than-expected business environment, FDX is cutting costs. We expect total operating expenses (adjusted) to decline 6.6% from the year-ago actuals, driven by its cost-saving plan. FDX’s cost-cutting efforts are likely to have aided the company’s bottom-line performance in the to-be-reported quarter. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share has been revised 0.5% upward in the past 60 days.

What Does the Zacks Model Say?

The proven Zacks model conclusively 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 an earnings surprise, as is the case here.

Earnings ESP: FedEx has an Earnings ESP of +0.42% as the Most Accurate Estimate is pegged at $3.72, 2 cents above 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 #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q3 Earnings

FedEx's fourth-quarter fiscal 2023 earnings (excluding $1.11 from non-recurring items) of $4.94 per share beat the Zacks Consensus Estimate of $4.83. However, the bottom line declined 28.1%  year over year.

Revenues of $21,930 million fell short of the Zacks Consensus Estimate of $22,723 million and decreased 10.1% 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 second-quarter 2023 earnings per share of $2.54 beat the Zacks Consensus Estimate of $2.51 but declined 22.8% year over year. Revenues of $22,055 million fell short of the Zacks Consensus Estimate of $22,879.7 million but decreased 10.9% year over year.

The overall adjusted operating profit fell 18.4% year over year to $2,919 million in the second quarter. In the second quarter, UPS generated $3,237 million of cash from operating activities. Capital expenditures were $1,211 million. Free cash flow was $2,066 million.

Air Transport Services’ second-quarter 2023 earnings of 57 cents beat the Zacks Consensus Estimate of 37 cents but declined 3.3% year over year.  Revenues of $529.3 million surpassed the Zacks Consensus Estimate of $514.6 million and rose 3.8% year over year. 

Air Transport Services’ total fleet in service included 125 aircraft (18 passengers and 107 freighters) at the end of second-quarter 2023 compared with 121 at the end of the prior-year quarter. 

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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