The e-Commerce Explosion Makes Its Way To FedEx's Bottom Line

The e-commerce explosion which was catalyzed by the pandemic has made its ways to FedEx Corporation FDX bottom line. The shipping giant reported a blowout fiscal first quarter of 2021, surpassing Wall Street's highest estimates. FedEx's business is thriving amid COVID-19 as its sales have been fueled with package volumes comparable to the peak holiday season.

Fiscal Q1 2020

For the quarter that ended on August 31, FedEx posted $19.3 billion in revenue for the 2021 fiscal year's first quarter, up from $17 billion the year-before quarter. An overall 11.6 million packages were delivered, which marks year-over-year increases of 13.5% for revenue and 31% for volume. This skyrocketing demand made its way to the bottom line as net income was an adjusted $1.28 billion, overall 60% higher from the same quarter in fiscal 2020's. Earnings per share surged to $4.72 and exceeded analyst consensus estimate by 83%.

Unprecedented demand led to strong results. The growth that the company expected to see over the following five years happened in just five months. The company plans to increase spending to keep up with this volume growth.

So much for death by Amazon.

Back in February 2018, FedEx shares collapsed following a Wall Street Journal report that Amazon.com, Inc. AMZN was about to launch a delivery service. This year, Amazon Amazon added nine planes to its air fleet beyween May and July. Amazon Air now includes about 70 planes. In June, Amazon announced its fleet is expected to grow to more than 80 by 2021. But despite its impressive performance and growth, Amazon Air still remains smaller than FedEx whose fleet contains 463 planes. Moreover, it is smaller than all of its competitors, including United Parcel Services Inc. UPS  fleet of 275 planes and DHL's 77 planes.

With a market capitalization of $60 billion, FedEx is still valued at less than half of UPS that is growing much slower. Moreover, before these blockbuster earnings were announced, FedEx shares were up 55% in 2020, while UPS has risen 37%. Everyone was shocked to hear that FedEx was doing so well yet they could have seen it coming considering it's been years in the making.

Outlook – conquering the holiday shipathon

The next challenge for the Memphis logistics giant is handling an even larger surge of packages as the holiday season is around the corner. Holiday "shipathon" is the next milestone as FedEx expects a record-breaking peak season.

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