We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
FedEx (FDX) Misses on Q3 Earnings, Trims FY19 EPS Guidance
Read MoreHide Full Article
FedEx Corporation (FDX - Free Report) reported disappointing results in the third quarter of fiscal 2019 (ended Feb 28, 2019). Simultaneously, the company slashed its fiscal 2019 earnings per share guidance for the second time. Following this view cut, the stock declined more than 5% in after-hours trading on Mar 19.
FedEx now anticipates fiscal 2019 earnings per share in the range of $15.10-$15.90 excluding pension adjustments, TNT Express integration expenses and certain other items (prior view was in the $15.50-$16.60 band). The mid-point of the guided range — $15.50 — fell short of the Zacks Consensus Estimate of $15.90.
The company’s earnings (excluding 22 cents from non-recurring items) of $3.03 per share missed the Zacks Consensus Estimate of $3.10. Moreover, the bottom line declined 18.6% on a year-over-year basis. This downside was primarily due to a dismal performance of the company’s major revenue generating segment, FedEx Express.
FedEx Corporation Price, Consensus and EPS Surprise
Quarterly revenues increased 2.9% year over year to $17.01 billion but lagged the Zacks Consensus Estimate of $17.64 billion. The top line benefited from higher volumes across all transportation segments and increased yields at FedEx Ground and FedEx Freight segments.
Operating income (on an adjusted basis) improved 2.1% year over year to $984 million in the reported quarter. Meanwhile, operating margin remained flat at 5.8% in third-quarter fiscal 2019.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) slid 1% to $9 billion due to soft international revenues on sluggish macroeconomic conditions and a weak global trade. Operating income came in at $370 million, up 17% year over year. Also, operating margin inched up to 4.1% from 3.5% in the year-ago quarter.
FedEx Ground revenues increased 9% year over year to $5.26 billion in the period under consideration. Volume growth and higher yields aided this segmental performance. Operating income came in at $577 million, down 6% year over year while operating margin contracted to 11% from 12.7% in the prior-year quarter.
FedEx Freight revenues rose 8% year over year to $1.75 billion. Segmental revenues benefited from higher revenue per shipment and average daily shipments. Also, the segment’s operating income soared 98% to $97 million. Moreover, operating margin expanded 250 basis points to 5.5% in the quarter under review.
Outlook
Capital expenses are still anticipated at $5.6 billion for fiscal 2019 while effective tax rate is now expected between 22% and 23% (previous view: 24-25%). As part of the company’ cost-reduction initiatives, it anticipates a pre-tax charge of $450-$575 million in the fourth quarter of fiscal 2019 on account of a buyout program for U.S.-based employees. However, this program is estimated to generate approximately $225-$275 million in savings during fiscal 2020.
The company expects to incur TNT Express integration expenses of more than $1.5 billion through fiscal 2021. Of the total costs, fiscal 2019 is expected to spend $435 million, lower than the earlier estimate of $450 million.
Zacks Rank & Key Picks
FedEx carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are Avianca Holdings S.A. , Atlas Air Worldwide Holdings and Radiant Logistics, Inc. (RLGT - Free Report) . While Avianca Holdings sports a Zacks Rank #1 (Strong Buy), Atlas Air Worldwide and Radiant Logistics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Avianca Holdings, Atlas Air Worldwide and Radiant Logistics have rallied more than 8%, 16% and 42%, respectively, on a year-to-date basis.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Image: Bigstock
FedEx (FDX) Misses on Q3 Earnings, Trims FY19 EPS Guidance
FedEx Corporation (FDX - Free Report) reported disappointing results in the third quarter of fiscal 2019 (ended Feb 28, 2019). Simultaneously, the company slashed its fiscal 2019 earnings per share guidance for the second time. Following this view cut, the stock declined more than 5% in after-hours trading on Mar 19.
FedEx now anticipates fiscal 2019 earnings per share in the range of $15.10-$15.90 excluding pension adjustments, TNT Express integration expenses and certain other items (prior view was in the $15.50-$16.60 band). The mid-point of the guided range — $15.50 — fell short of the Zacks Consensus Estimate of $15.90.
The company’s earnings (excluding 22 cents from non-recurring items) of $3.03 per share missed the Zacks Consensus Estimate of $3.10. Moreover, the bottom line declined 18.6% on a year-over-year basis. This downside was primarily due to a dismal performance of the company’s major revenue generating segment, FedEx Express.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation Price, Consensus and EPS Surprise | FedEx Corporation Quote
Quarterly revenues increased 2.9% year over year to $17.01 billion but lagged the Zacks Consensus Estimate of $17.64 billion. The top line benefited from higher volumes across all transportation segments and increased yields at FedEx Ground and FedEx Freight segments.
Operating income (on an adjusted basis) improved 2.1% year over year to $984 million in the reported quarter. Meanwhile, operating margin remained flat at 5.8% in third-quarter fiscal 2019.
Segmental Performance
Quarterly revenues at FedEx Express (including TNT Express) slid 1% to $9 billion due to soft international revenues on sluggish macroeconomic conditions and a weak global trade. Operating income came in at $370 million, up 17% year over year. Also, operating margin inched up to 4.1% from 3.5% in the year-ago quarter.
FedEx Ground revenues increased 9% year over year to $5.26 billion in the period under consideration. Volume growth and higher yields aided this segmental performance. Operating income came in at $577 million, down 6% year over year while operating margin contracted to 11% from 12.7% in the prior-year quarter.
FedEx Freight revenues rose 8% year over year to $1.75 billion. Segmental revenues benefited from higher revenue per shipment and average daily shipments. Also, the segment’s operating income soared 98% to $97 million. Moreover, operating margin expanded 250 basis points to 5.5% in the quarter under review.
Outlook
Capital expenses are still anticipated at $5.6 billion for fiscal 2019 while effective tax rate is now expected between 22% and 23% (previous view: 24-25%). As part of the company’ cost-reduction initiatives, it anticipates a pre-tax charge of $450-$575 million in the fourth quarter of fiscal 2019 on account of a buyout program for U.S.-based employees. However, this program is estimated to generate approximately $225-$275 million in savings during fiscal 2020.
The company expects to incur TNT Express integration expenses of more than $1.5 billion through fiscal 2021. Of the total costs, fiscal 2019 is expected to spend $435 million, lower than the earlier estimate of $450 million.
Zacks Rank & Key Picks
FedEx carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are Avianca Holdings S.A. , Atlas Air Worldwide Holdings and Radiant Logistics, Inc. (RLGT - Free Report) . While Avianca Holdings sports a Zacks Rank #1 (Strong Buy), Atlas Air Worldwide and Radiant Logistics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Avianca Holdings, Atlas Air Worldwide and Radiant Logistics have rallied more than 8%, 16% and 42%, respectively, on a year-to-date basis.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>