Bull Of The Day: FedEx (FDX)

FedEx (FDX - Free Report) posted blowout quarterly results on September 15 that highlighted its ability to thrive during the coronavirus. FDX shares have now soared roughly 80% in the past three months and its outlook appears strong, as it expands its e-commerce reach.

Expansion Plans…  

FedEx shares had been falling over the last several years, as its longer-term earnings outlook fell. FDX then surprised some on Wall Street when it essentially cut ties with Amazon (AMZN - Free Report) las summer. Company executives apparently didn’t want to be in business with an e-commerce titan that has its own shipping and logistics aspirations.

FedEx said at the time that Amazon represented only a small proportion of its sales. Since then, the company has focused on working with all of the other major players in traditional retail like Walmart (WMT - Free Report) and Target (TGT - Free Report) , that have gone all-in on e-commerce.

Meanwhile, the Memphis, Tennessee-based firm is bolstering its automation efforts and modernizing its Express air fleet. The long-term plan is to attract more e-commerce and business-to-consumer clients, while remaining a business-to-business heavy operation.

Pandemic Boost…

FedEx topped our bottom-line estimate by 80% in its fiscal fourth quarter, as it gained momentum in its business to consumer space. Still, its sales slipped over 2% on the back of declines in its higher-margin Express air-shipment unit. But Wall Street seemed convinced that its B2B focused segment would bounce back, while its digital commerce division continued to grow.

FDX promptly smashed our adjusted Q1 fiscal 2021 earnings estimate by nearly 90%, with the figure up 60% from the year-ago period. And its revenue jumped over 13% to $19.3 billion for the three-month period ended on August 31, which marked its strongest sales growth since Q4 FY17.

The firm’s ground segment jumped during the summer months, as consumers continued their massive digital shopping sprees. FDX also benefited from declines in international passenger flights, as businesses had fewer opportunities to use extra cargo space on commercial flights.

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