Can FedEx Deliver?

Photo Credit: Gerard Donnelly

FedEx Corporation (FDX) Industrials - Air Freight & Logistics | Reports September 20, After Market Closes

Key Takeaways

• The Estimize consensus is looking for earnings per share of $2.81 on $14.42 billion in revenue, 2 cents higher than Wall Street on the bottom line and right in line on the top
• Strong volume growth in FedEx Ground continues to carry the slowing Express and Freight segments
• The acquisition of TNT Express earlier this year will provide strong synergies once the integration process is completed
• What are you expecting for FDX? Get your estimate in here!

Global courier service, FedEx, is scheduled to kick off its fiscal 2017 tomorrow after the market closes. FedEx has greatly benefited from the rise of ecommerce sales in the past 5 years. Both revenue and earnings have successfully expanded given the new opportunities created from this ongoing trend. Shares are up nearly 8% year to date and 11% in the past 12 months largely driven by strong quarterly growth. It’s expected that FedEx will deliver another strong report tomorrow afternoon given its recent momentum

Analysts at Estimize are calling for earnings per share of $2.81, 16% higher than the same period last year. Revenue for the period is anticipated to jump 17% to $14.42 billion, marking a second consecutive quarter of double digit gains. That estimate has increased 5% since FedEx’s most recent report in June. Given its recent string of success, it’s not surprising that FedEx consistently tops both the Estimize and Wall Street consensus.

FedEx currently reports thee core financial segments; Express, Ground and Freight. At the moment, Express has been the standout performer accounting for 40% of the company’s operating income followed by Ground and Freight. FedEx Express is the fastest and most expensive mode of delivery which makes the biggest contributions to income and margins. Ground, on the other hand, is seeing the greatest upside thanks to rising demand for ecommerce purchases. For the fourth quarter, the ground segment reported revenue of 4.29 billion, 20% higher than a year earlier.

This quarter should highlight new developments surrounding the recent acquisition of TNT Express. TNT is the equivalent of FedEx in Europe and should provide FedEx with access to an already established and dominant network in the region. The integration process is still underway and will only likely be highlighted in the conference call rather than the report.