FedEx smashes analysts’ expectations
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FedEx smashes analysts’ expectations

Global shipping company FedEx smashed analysts’ expectations in June when it reported fourth-quarterly earnings. The company, which is often seen as a bellwether for the health of the U.S. economy, beat on the top and bottom line, and forecast higher earnings for 2018, sending its share price up. This surge follows on from a year-to-date of outperformance: according to CNBC, on June 20, FedEx’s share price had gained over 12% in 2017, while the Dow Jones Transportation Average had risen by around 3%.

FedEx’s share price is now up 16% over 2017 so far

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SOURCE: Yahoo Finance

FedEx reported adjusted earnings per share of $4.25 against analysts’ expectations of $3.88 – an impressive win. It also saw higher revenue than forecast: $15.7 billion against $15.56 billion.

However, the company’s underlying sales growth across all its businesses is the real indicator of health. At the moment, FedEx does not appear to have a weak spot. It’s Express segment logged $7.18 billion sales against an expected figure of $7.07; its TNT Express division logged $1.91 billion against expectations of $1.83 billion, its Ground segment broke even, delivering $4.68 billion, in line with predictions; and its Freight section made sales of $1.70 billion against a forecast of $1.66 billion.

CNBC also cited an anonymous source who claimed FedEx’s executives have been in discussions with President Donald Trump to discuss a “possible role in the White House infrastructure push.”

The company released a statement about the claim, saying: "While FedEx strongly supports the need for funding an updated and improved system, it is also essential that the cost accounting going forward reflect airline usage, which is a key indicator for system maintenance and growth."

For fiscal 2017, the company reported adjusted earnings of $12.30 per share. It also raised its outlook for next year, and now forecasts adjusted earnings in the range of $13.20 to $14 for 2018.

Disclosure

Dominion holds FedEx in its Global Trends Ecommerce fund.


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