Photo by Bannon Morrissy on Unsplash
 

FedEx Corporation (FDX - Free Report) is set to release third-quarter fiscal 2023 (ended Feb 28) results on Mar 16, after the market close.

FDX has a disappointing surprise record with its earnings per share surpassing the Zacks Consensus Estimate in only one of the preceding four quarters while missing thrice. The average beat is 1.33%.

The Zacks Consensus Estimate for earnings per share has been revised 2.94% downward in the past 60 days.

Against this backdrop, let’s look into the factors that are likely to have impacted FedEx’s to-be-reported quarter performance.

Akin to the fiscal second quarter, we expect persistent demand weakness, especially at FedEx Express, to have dented performance in the to-be-reported quarter. Also, macroeconomic weakness in Asia and service challenges in Europe are likely to affect the results of this segment.

The Zacks Consensus Estimate for segmental revenues suggests a 7.4% decline from the year-ago fiscal quarter’s reported number. Our estimate indicates a decline of 6.1% year over year.

Increased purchased transportation rates and lower package volume are likely to have affected the quarterly performance of the FedEx Ground segment. The Zacks Consensus Estimate for the segment’s revenues suggests a 1.3% decline from the year-ago fiscal quarter’s reported number. Our estimate indicates a decline of 3.7% year over year.

Softness pertaining to average daily shipments is likely to have hurt the performance of the FedEx Freight segment as well.

However, the increased fuel surcharge and cost-control actions are likely to have aided FDX’s performance in the to-be-reported quarter.
 

What Does the Zacks Model Say?

The proven Zacks model does not conclusively predict an earnings beat for FedEx this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings surprise. However, that is not the case here. 

Earnings ESP: FedEx has an Earnings ESP of -1.41% as the Most Accurate Estimate is pegged at $2.61, 3 cents lower than the Zacks Consensus Estimate.

Zacks Rank: FedEx currently carries a Zacks Rank #3.
 

Highlights of Q2 Earnings

FedEx's second-quarter fiscal 2023 (ended Nov 30, 2022) earnings (excluding 11 cents from non-recurring items) of $3.18 per share beat the Zacks Consensus Estimate of $2.77 but declined 34.2% year over year. Quarterly revenues of $22,814 million fell short of the Zacks Consensus Estimate of $23,662.9 million and decreased by 2.8% from the year-ago fiscal quarter’s reported figure.

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