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Why Is FedEx (FDX) Down 7.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for FedEx (FDX - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is FedEx due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at FedEx in Q1

FedEx Corporation's first-quarter fiscal 2024 earnings per share (EPS) (excluding 32 cents from non-recurring items) of $4.55 beat the Zacks Consensus Estimate of $3.70. Moreover, the bottom line improved year over year.

Revenues of $21,681 million fell short of the Zacks Consensus Estimate of $21,836.6 million and decreased 6.5% from the year-ago quarter’s reported figure.

Quarterly results were favorably affected by the execution of the company's DRIVE program initiatives and continued focus on revenue quality. The improvement in operating results was partially offset by ongoing demand weakness.

Operating expenses (reported basis) decreased 8% to $20,196 million owing to the company’s cost reduction actions. Operating income, on a reported basis, increased 25% to $1,485 million, from the year-ago fiscal quarter’s reported number.

FedEx Express segment’s revenues fell 9% year over year to $10,085 million, owing to decreased U.S. domestic package. Operating income of the segment grew 18% year over year, as a 9% decline in revenues was more than offset by reduced operating expenses.Cost reductions and transformation efforts have aided the quarterly results.

FedEx Ground segment’s revenues increased 3% year over year to $8,420 million due to higher yield.Operating income grew 59% year over year, owing to yield improvement and cost reductions. Cost per package decreased more than 2%, driven by lower line-haul expenses and improved dock and first-mile and last-mile productivity.

FedEx Freight revenues declined 16% from the year-ago quarter’s reported figure to $2,291 million. The downfall was due to lower volume and fuel surcharges.The segment’s operating income fell 26% during the reported quarter owing to lower fuel surcharges and shipments, partially offset by base yield improvement. FedEx Freight completed the planned closure of 29 terminal locations during August.

Average daily shipments declined 13%. Capital expenditures for first-quarter fiscal 2024 came in at $1,290 million.

FedEx exited first-quarter fiscal 2024 with cash and cash equivalents of $7,055 million compared with $6,856 million at the prior-quarter end. Long-term debt (less current portion) was $20,145 million compared with $20,453 million at the fourth-quarter end.

FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 1.95 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited first-quarter results by $0.02 per diluted share.

Fiscal 2024 Outlook

For 2024, FedEx has updated its guidance.

FDX now expects revenues to be flat year over year (prior view: flat to low single digits). EPS is now expected to be in the range of $15.10-$16.60 (prior view: $15.00 to $17.00) before the mark-to-market retirement plans accounting adjustments and $17.00-$18.50 (prior view: $16.50 to $18.50), excluding costs related to business optimization initiatives.

FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. Effective tax rate is still estimated to be 25%.

FedEx anticipates to repurchase an additional $1.5 billion of common stock during fiscal 2024. As of Aug 31, 2023, FDX had an available cash balance of $7.1 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, FedEx has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. Notably, FedEx has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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