Quarterly Earnings Forecast for FedEx

Introduction

The upcoming quarterly earnings report from FedEx is generating a lot of anticipation among investors. One of the key factors driving this heightened expectation is the successful labor negotiations that recently concluded at United Parcel Service (UPS).

Financial Expectations

The fiscal first-quarter numbers will be unveiled on Wednesday evening. Analysts on Wall Street are predicting earnings per share of $3.71, derived from sales amounting to $21.7 billion. To provide context, in the same period last year, FedEx reported earnings per share of $3.44 from sales totaling $23.2 billion.

Reasons for Optimism

Investors are particularly hopeful for positive news. One reason for this optimism is the additional volume that FedEx received from UPS. Many businesses shifted their shipping needs to FedEx as a precautionary measure against the possibility of a UPS labor strike. To shed light on the situation, Citi analyst Christian Wetherbee mentioned in a recent report that UPS recently provided guidance that was 25% lower than market consensus for third-quarter earnings, primarily due to higher labor costs and changes in shipping volumes.

Raymond James analyst Patrick Tyler Brown also noted in a report that a portion of the volume previously serviced by Yellow, a now-bankrupt less-than-truckload provider, has been redirected to FedEx. Furthermore, FedEx’s own cost-cutting initiatives have contributed to the positive performance of its stock.

Conclusion

As FedEx prepares to release its quarterly earnings report, investors are hoping for strong results. The labor negotiations at UPS have played a significant role in driving this expectation higher. Additionally, the increase in volume and positive market conditions have further contributed to the overall positivity surrounding FedEx’s performance.

FedEx Shares Experience 8% Surge

Shares of FedEx have seen an impressive 8% increase since the company’s last earnings report. Although the company’s fiscal fourth-quarter earnings exceeded expectations, the provided guidance was not as strong. Management projected that FedEx would earn between $16.50 and $18.50 per share in fiscal year 2024, surpassing the almost $15 per share earned in fiscal year 2023. However, this growth forecast fell short of Wall Street’s expectation of around $18.30 per share.

Following the release of this weaker-than-desired outlook, shares dropped 2.5%, closing at $224.73. Nevertheless, shares have since rebounded and closed at just under $250 per share on Tuesday.

Impressive Year-to-Date Performance

FedEx shares have demonstrated stellar year-to-date performance, surging by 44%. In comparison, the S&P 500 and Dow Jones Industrial Average have experienced increases of approximately 16% and 4% respectively, during the same timeframe.

Potential Impact of UPS Volume Shift

The shift in volume from UPS to FedEx may affect the latter’s performance over one or two quarters. Investors will closely monitor factors such as positive volume trends and pricing to gauge the stock’s upward momentum, in addition to a solid fiscal first quarter.

Management Conference Call

To discuss the company’s results, management will be hosting a conference call at 5:30 p.m. Eastern time.