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FDX has an impressive surprise record, with its earnings per share surpassing the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 16.94%.
Given this backdrop, let's examine the factors that are likely to have influenced FedEx’s performance in the soon-to-be-reported quarter.
Like the past few quarters, we expect lackluster shipping demand to have hurt FedEx’s performance in second-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 anticipate revenues from the Express unit to be down 4.3% from the second-quarter fiscal 2023 actuals.
To navigate the weaker-than-expected business environment, FDX has been cutting costs. We expect total operating expenses (adjusted) to decline 3.9% from the year-ago actuals, driven by the company’s cost-saving plan. FDX’s cost-cutting efforts are likely to have aided its bottom-line performance in the to-be-reported quarter. The Zacks Consensus Estimate for second-quarter fiscal 2024 earnings per share has been revised 1.5% upward in the past 60 days.
What Does the Zacks Model Say?
Our proven 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 +2.48% as the Most Accurate Estimate is pegged at $4.24, 11 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.
FedEx's first-quarter fiscal 2024 earnings per share (excluding 32 cents from non-recurring items) of $4.55 beat the Zacks Consensus Estimate of $3.70. The bottom line improved year over year.
Revenues of $21,681 million lagged 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 impacted 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.
Recent Results of Industry Peers
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.
UPS reported third-quarter 2023 earnings per share of $1.57, beating the Zacks Consensus Estimate of $1.53. However, the company’s earnings declined 47.5% year over year. Revenues of $21,061 million lagged the Zacks Consensus Estimate of $21,538.7 million and decreased 12.8% year over year.
UPS generated $7,827 million of net cash from operating activities in the first nine months of 2023. Capital expenditure was $3,109 million. The free cash flow was $4,887 million. The overall adjusted operating profit fell 48.7% year over year to $1,615 million.
Air Transport Services' third-quarter 2023 quarterly earnings per share (excluding 8 cents from non-recurring items) of 32 cents missed the Zacks Consensus Estimate of 49 cents and declined 46.7% year over year. Revenues of $523.1 million surpassed the Zacks Consensus Estimate of $522.7 million and rose 1.2% year over year.
Adjusted EBITDA plunged 16% year over year to $137 million. The operating cash flow fell to $117.5 million from $147.9 million a year ago. In the third quarter, the adjusted free cash flow was $68.8 million compared with $91.4 million in the prior year.
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FedEx (FDX) to Report Q2 Earnings: Is a Beat in the Offing?
FedEx Corporation (FDX - Free Report) is set to release second-quarter fiscal 2024 (ended November 30, 2023) results on Dec 19, 2023, after market close.
FDX has an impressive surprise record, with its earnings per share surpassing the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 16.94%.
FedEx Corporation Price and EPS Surprise
FedEx Corporation price-eps-surprise | FedEx Corporation Quote
Given this backdrop, let's examine the factors that are likely to have influenced FedEx’s performance in the soon-to-be-reported quarter.
Like the past few quarters, we expect lackluster shipping demand to have hurt FedEx’s performance in second-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 anticipate revenues from the Express unit to be down 4.3% from the second-quarter fiscal 2023 actuals.
To navigate the weaker-than-expected business environment, FDX has been cutting costs. We expect total operating expenses (adjusted) to decline 3.9% from the year-ago actuals, driven by the company’s cost-saving plan. FDX’s cost-cutting efforts are likely to have aided its bottom-line performance in the to-be-reported quarter. The Zacks Consensus Estimate for second-quarter fiscal 2024 earnings per share has been revised 1.5% upward in the past 60 days.
What Does the Zacks Model Say?
Our proven 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 +2.48% as the Most Accurate Estimate is pegged at $4.24, 11 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Highlights of Q1 Earnings
FedEx's first-quarter fiscal 2024 earnings per share (excluding 32 cents from non-recurring items) of $4.55 beat the Zacks Consensus Estimate of $3.70. The bottom line improved year over year.
Revenues of $21,681 million lagged 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 impacted 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.
Recent Results of Industry Peers
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.
UPS reported third-quarter 2023 earnings per share of $1.57, beating the Zacks Consensus Estimate of $1.53. However, the company’s earnings declined 47.5% year over year. Revenues of $21,061 million lagged the Zacks Consensus Estimate of $21,538.7 million and decreased 12.8% year over year.
UPS generated $7,827 million of net cash from operating activities in the first nine months of 2023. Capital expenditure was $3,109 million. The free cash flow was $4,887 million. The overall adjusted operating profit fell 48.7% year over year to $1,615 million.
Air Transport Services' third-quarter 2023 quarterly earnings per share (excluding 8 cents from non-recurring items) of 32 cents missed the Zacks Consensus Estimate of 49 cents and declined 46.7% year over year. Revenues of $523.1 million surpassed the Zacks Consensus Estimate of $522.7 million and rose 1.2% year over year.
Adjusted EBITDA plunged 16% year over year to $137 million. The operating cash flow fell to $117.5 million from $147.9 million a year ago. In the third quarter, the adjusted free cash flow was $68.8 million compared with $91.4 million in the prior year.