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Did FedEx’s Fiscal 2Q17 Earnings Meet Analysts’ Expectations?

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FedEx’s 2Q17 Earnings

On December 20, 2016, the world’s premier express delivery service giant, FedEx (FDX), announced its fiscal 2Q17 results. The company reported adjusted EPS (earnings per share) of $2.8, as compared to the analysts’ consensus estimate of $2.9 per share. This means that the company missed its earnings target by 3.4%.

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Stock price reaction

On December 20, 2016, FDX’s stock opened higher but then took a nosedive later in the day. The company’s stock settled at $198.7 to close 0.6% up on the same day. The TNT Express’s integration process into FedEx Express is expected to expedite in 2018 and 2019.

In fiscal 2Q17, FDX experienced the negative impact of $0.18 per share on EPS due to the TNT Express integration. The company also saw a $0.03 per share unfavorable impact associated with TNT Express’s intangible asset amortization that quarter. These two items were absent in 2Q16.

Since the beginning of calendar 2016, FDX stock has returned nearly 33.4%, as compared to UPS’s 22.1%. Below are the YTD (year-to-date) peer group performances for the comparable quarter:

  • H. Robinson Worldwide (CHRW) returned 20.2% YTD.
  • YRC Worldwide (YRCW), a major name in US logistics sector returned a mere 1.7% YTD.
  • Expeditor’s International of Washington (EXPD) returned 20.3% YTD.
  • The target hunter in the transportation space, XPO Logistics (XPO) returned a whopping 64.8% YTD.

Notably, railroads and airlines make up ~5.9% and 5.1%, respectively, of the portfolio holdings of the iShares US Industrials ETF (IYJ), which has ~1.7% of its total holdings in FedEx.

Management outlook

FedEx expressed its inability to provide guidance related to fiscal 2017 earnings, given mark-to-market pension accounting adjustments. But not counting pension accounting adjustments, the company expects its fiscal 2017 EPS to be in the $10.95–$11.45 range, including TNT Express’s results and a moderate economic growth.

Continue to the next part of this series for more details.

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