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FedEx Corporation’s (FDX - Free Report) second-quarter fiscal 2024 earnings (excluding 44 cents from non-recurring items) of $3.99 per share missed the Zacks Consensus Estimate of $4.14. However, the bottom line improved 25.5% year over year. The uptick was backed by the execution of the company's DRIVE program initiatives and continued focus on service and revenue quality.
Revenues of $22,165 million fell short of the Zacks Consensus Estimate of $22,328.9 million and decreased 3% from the year-ago fiscal quarter’s reported figure.
FedEx Corporation Price, Consensus and EPS Surprise
Operating expenses (reported basis) decreased 3% to $20,889 million owing to the company’s cost-reduction actions. Operating income, on a reported basis, increased 9% to $1,276 million from the year-ago fiscal quarter’s reported number.
Segmental Performance During the Quarter
FedEx Express segment’s revenues fell 6% year over year to $10,254 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment fell 60% year over year due to lower revenues, partially offset by reduced operating expenses.
FedEx Ground segment’s revenues increased 3% year over year to $8,639 million due to higher yield. Operating income grew 51% year over year, owing to yield improvement, cost reductions, and higher volumes. Cost per package declined 2%, driven by lower line-haul expenses and improved first-mile and last-mile productivity.
FedEx Freight revenues declined 4% from the year-ago fiscal quarter’s reported figure to $2,360 million. The segment’s operating income grew 11% year over year despite a decline in revenues. The uptick was backed by higher yield and increased efficiency, partially offset by lower shipments.
Average daily shipments declined 5%. Capital expenditures for second-quarter fiscal 2024 were $1,305 million.
Liquidity
FedEx exited second-quarter fiscal 2024 with cash and cash equivalents of $6,729 million compared with $7,055 million at the end of the prior quarter. Long-term debt (less current portion) was $20,193 million compared with $20,145 million at the prior-quarter end.
FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 2 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited second-quarter results by $0.05 per diluted share.
Fiscal 2024 Outlook
For 2024, FedEx has updated its guidance.
FDX now expects revenues to decline by low-single-digit percentage (prior view: flat year over year). Earnings per share (EPS) are now expected to be in the range of $15.35-$16.85 (prior view: $15.10-$16.60) before the MTM retirement plans accounting adjustments. FDX continues to expect EPS view in the range of $17.00-$18.50, excluding costs related to business optimization initiatives.
FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. The effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $1 billion of common stock during fiscal 2024. As of Nov 30, 2023, FDX had available cash balance of $6.7 billion.
FedEx currently carries a Zacks Rank #3 (Hold).
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from nonrecurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2023EPS of $1.83, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year.
Operating revenues of $2,839 million missed the Zacks Consensus Estimate of $2,876.1 million. The top line jumped 0.4% year over year, with passenger revenues accounting for 92.2% of the top line and increasing 0.1% owing to continued recovery in air-travel demand.
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FedEx (FDX) Lags Q2 Earnings & Revenue Estimates, Updates View
FedEx Corporation’s (FDX - Free Report) second-quarter fiscal 2024 earnings (excluding 44 cents from non-recurring items) of $3.99 per share missed the Zacks Consensus Estimate of $4.14. However, the bottom line improved 25.5% year over year. The uptick was backed by the execution of the company's DRIVE program initiatives and continued focus on service and revenue quality.
Revenues of $22,165 million fell short of the Zacks Consensus Estimate of $22,328.9 million and decreased 3% from the year-ago fiscal quarter’s reported figure.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation Quote
Operating expenses (reported basis) decreased 3% to $20,889 million owing to the company’s cost-reduction actions. Operating income, on a reported basis, increased 9% to $1,276 million from the year-ago fiscal quarter’s reported number.
Segmental Performance During the Quarter
FedEx Express segment’s revenues fell 6% year over year to $10,254 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment fell 60% year over year due to lower revenues, partially offset by reduced operating expenses.
FedEx Ground segment’s revenues increased 3% year over year to $8,639 million due to higher yield. Operating income grew 51% year over year, owing to yield improvement, cost reductions, and higher volumes. Cost per package declined 2%, driven by lower line-haul expenses and improved first-mile and last-mile productivity.
FedEx Freight revenues declined 4% from the year-ago fiscal quarter’s reported figure to $2,360 million. The segment’s operating income grew 11% year over year despite a decline in revenues. The uptick was backed by higher yield and increased efficiency, partially offset by lower shipments.
Average daily shipments declined 5%. Capital expenditures for second-quarter fiscal 2024 were $1,305 million.
Liquidity
FedEx exited second-quarter fiscal 2024 with cash and cash equivalents of $6,729 million compared with $7,055 million at the end of the prior quarter. Long-term debt (less current portion) was $20,193 million compared with $20,145 million at the prior-quarter end.
FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 2 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited second-quarter results by $0.05 per diluted share.
Fiscal 2024 Outlook
For 2024, FedEx has updated its guidance.
FDX now expects revenues to decline by low-single-digit percentage (prior view: flat year over year). Earnings per share (EPS) are now expected to be in the range of $15.35-$16.85 (prior view: $15.10-$16.60) before the MTM retirement plans accounting adjustments. FDX continues to expect EPS view in the range of $17.00-$18.50, excluding costs related to business optimization initiatives.
FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. The effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $1 billion of common stock during fiscal 2024. As of Nov 30, 2023, FDX had available cash balance of $6.7 billion.
FedEx currently carries a Zacks Rank #3 (Hold).
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from nonrecurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2023 EPS of $1.83, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year.
Operating revenues of $2,839 million missed the Zacks Consensus Estimate of $2,876.1 million. The top line jumped 0.4% year over year, with passenger revenues accounting for 92.2% of the top line and increasing 0.1% owing to continued recovery in air-travel demand.