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FDX has an impressive surprise record, with its earnings per share surpassing the Zacks Consensus Estimate in three of the preceding four quarters and missing the mark on the other occasion. The average beat is 12.34%.
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 third-quarter fiscal 2024. The performance of the Express unit, FDX's largest segment, is likely to have been severely hurt due to demand-induced volume weakness. We anticipate revenues from the Express unit to be up marginally from third-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 3.4% 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.
What Does the Zacks Model Say?
Our proven 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, this is not the case here.
Earnings ESP: FedEx has an Earnings ESP of -6.84% as the Most Accurate Estimate is pegged at $3.31, 24 cents below 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 #4 (Sell).
FedEx's second-quarter fiscal 2024 earnings per share of $3.99 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 FDX’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% year over year.
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’ fourth-quarter 2023 earnings per share of $2.47 beat the Zacks Consensus Estimate of $2.44 but declined 31.7% year over year. Revenues of $24.91 billion fell short of the Zacks Consensus Estimate of $25.30 billion and decreased 7.8% year over year.
UPS generated $10.23 billion of net cash from operating activities in 2023. Capital expenditures were $5.15 billion. Free cash flow was $5.25 billion. The overall adjusted operating profit fell 27.1% year over year to $2.78 billion.
U.S. Domestic Package revenues decreased 7.3% year over year to $16.91 billion, caused by a 7.4% dip in average daily volume. The actual figure was lower than our estimate of $17.07 billion. The adjusted operating margin for the segment was 9.3%.
Air Transport Services reported disappointing fourth-quarter 2023 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate. Quarterly earnings per share (excluding 41 cents from non-recurring items) of 18 cents missed the Zacks Consensus Estimate of 29 cents and declined 66% year over year.
Revenues of $517 million lagged the Zacks Consensus Estimate of $521 million and fell 3% year over year. Air Transport Services’ total fleet in service included 130 aircraft (18 passengers and 112 freighters) at the end of 2023 compared with 128 a year ago. Total operating expenses increased 4.3% to $480.4 million.
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FedEx (FDX) to Report Q3 Earnings: What's in the Offing?
FedEx Corporation (FDX - Free Report) is set to release its third-quarter fiscal 2024 (ended Feb 29, 2024) results on Mar 21, 2024, after market close.
FDX has an impressive surprise record, with its earnings per share surpassing the Zacks Consensus Estimate in three of the preceding four quarters and missing the mark on the other occasion. The average beat is 12.34%.
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 third-quarter fiscal 2024. The performance of the Express unit, FDX's largest segment, is likely to have been severely hurt due to demand-induced volume weakness. We anticipate revenues from the Express unit to be up marginally from third-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 3.4% 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.
What Does the Zacks Model Say?
Our proven 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, this is not the case here.
Earnings ESP: FedEx has an Earnings ESP of -6.84% as the Most Accurate Estimate is pegged at $3.31, 24 cents below 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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Highlights of Q2 Earnings
FedEx's second-quarter fiscal 2024 earnings per share of $3.99 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 FDX’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% year over year.
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’ fourth-quarter 2023 earnings per share of $2.47 beat the Zacks Consensus Estimate of $2.44 but declined 31.7% year over year. Revenues of $24.91 billion fell short of the Zacks Consensus Estimate of $25.30 billion and decreased 7.8% year over year.
UPS generated $10.23 billion of net cash from operating activities in 2023. Capital expenditures were $5.15 billion. Free cash flow was $5.25 billion. The overall adjusted operating profit fell 27.1% year over year to $2.78 billion.
U.S. Domestic Package revenues decreased 7.3% year over year to $16.91 billion, caused by a 7.4% dip in average daily volume. The actual figure was lower than our estimate of $17.07 billion. The adjusted operating margin for the segment was 9.3%.
Air Transport Services reported disappointing fourth-quarter 2023 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate. Quarterly earnings per share (excluding 41 cents from non-recurring items) of 18 cents missed the Zacks Consensus Estimate of 29 cents and declined 66% year over year.
Revenues of $517 million lagged the Zacks Consensus Estimate of $521 million and fell 3% year over year. Air Transport Services’ total fleet in service included 130 aircraft (18 passengers and 112 freighters) at the end of 2023 compared with 128 a year ago. Total operating expenses increased 4.3% to $480.4 million.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.