Delivery and logistics company FedEx Corp FDX is set to report fourth-quarter financial results after market close Tuesday.
Here’s a look at the key expectations from analysts and why the company’s earnings report could be a bellwether for the overall economy.
Earnings Expectations: Analysts expect FedEx to report fourth-quarter earnings per share of $4.89, according to data from Benzinga Pro.
The company reported earnings per share of $6.87 in the fourth quarter last year. Earnings per share were $3.41 in the most recently reported third quarter.
FedEx has beat analysts’ expectations for earnings per share in each of the last three quarters.
Analysts expect the company to report fourth-quarter revenue of $22.72 billion. The company reported fourth-quarter revenue of $24.4 billion in the last fiscal year. Third quarter revenue was a reported $22.17 billion.
FedEx has missed analysts’ estimates for revenue in the last four straight quarters.
In its third-quarter financial results, the company said it was focusing on cost reduction items after seeing operating income impacted by inflation and revenue impacted by overall global weakness.
“We’ve continued to move with urgency to improve efficiency, and our cost actions are taking hold, driving an improved outlook for the current fiscal year,” FedEx CEO Raj Subramaniam said.
The company raised its full-year fiscal year earnings per share guidance from a range of $13 to $14 to a new range of $14.60 to $15.20. Analysts and investors will likely be watching this key item to see if the revised earnings per share are met or exceeded.
Related Link: Freight Recession: 5 US Stocks To Watch As Transportation Costs Plummet To Pre-Covid Levels
What Analysts Are Saying: Morgan Stanley analyst Ravi Shanker recently reiterated an Equal Weight rating on FedEx.
The analyst, who had a $180 price target on FedEx, saw fourth-quarter earnings per share coming in at $4.63.
Shanker said data showed FedEx had lower domestic flight frequency in the month of April and could underperform on this key item.
The analyst also said FedEx peers pointed to a tough quarter for freight, which could impact the company’s fourth-quarter results.
Recent analyst activity has seen mostly Outperform and Overweight ratings assigned or reiterated for FedEx.
Important Economic Bellwether: Analysts and investors will be closely monitoring FedEx’s earnings report, which comes after a three-day weekend for the stock market.
FedEx can be an important economic indicator of how strong business is given its global role in shipping and delivery. The company’s updates on freight and deliveries can indicate health or weakness in the e-commerce market.
According to FedEx, the company delivers over 16 million items each day. The company said it also connects a “vast majority of global GDP.”
FedEx has over 360,000 direct suppliers and helps support 16.5 million global jobs. The company’s operations help generate over $700 billion in revenue for other companies.
Perhaps the biggest bellwether of FedEx is its relationship to small businesses. The company said that around 88% of its suppliers are considered small businesses. The company supports over 800,000 global small businesses.
Weakness in demand for FedEx could suggest overall weakness in the global economy and e-commerce markets or it could suggest weakness for small businesses with global leaders like Amazon seeing increased market share.
The company’s comments during its earnings call will be closely monitored to see if the picture is painted as weakness or strength and which areas are leading the way.
FDX Price Action: FedEx shares trade at $230.94 on Tuesday at publication versus a 52-week trading range of $141.92 to $248.76.
FedEx shares fell over 31% in 2022. Shares were up over 8% after the company reported third-quarter 2023 financial results and are up 31% year-to-date in 2023.
Competitor United Parcel Services, Inc. UPS saw shares up only 1.4% year-to-date in 2023, with FedEx shares outperforming. UPS shares could see action after hours based on the report from FedEx.
Read Next: Amazon Reshuffles Positions: Air Cargo Business Leader To Helm Workplace Safety Division
Photo: Courtesy FedEx
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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