Why FedEx Might Miss on Earnings for Fiscal 1Q18



Analysts’ fiscal 1Q18 earnings estimates

The analysts surveyed by Thomson Reuters have estimated an adjusted EPS (earning per share) of $3.14 in fiscal 1Q18 for FedEx (FDX). In the same period last year, the company recorded adjusted earnings of $2.8 per share, which indicates that analysts are expecting a 12.1% rise in FDX’s adjusted EPS on a YoY (year-over-year) basis.

The surveyed analysts project adjusted EPS of $13.5 and $15.5 per share for fiscal 2018 and fiscal 2019, respectively. Compared with its adjusted earnings of $12.3 per share in fiscal 2017, this reflects a YoY growth of 9.8% and 14.6% in fiscal 2018 and fiscal 2019, respectively.

Article continues below advertisement

The cyberattack on TNT Express’s systems

FedEx’s Express segment will be consolidating the results of TNT Express beginning in fiscal 1Q18. But in June 2017, TNT Express faced cyberattacks on its IT (information technology) system, and the company feared that its information systems would not fully recover from the impact of the attacks.

The IT system disruption could lower FedEx’s earnings by $0.50–$1.00 per share for the year through next May, noted Citigroup’s (C) analyst Christian Wetherbee. That accounts for 4%–7% of the FedEx’s fiscal 2018 estimated $13.50 earnings per share.

FedEx’s 1Q18 earnings will most likely be hit by the recent hurricanes as well. In addition, the company’s interest expenses are slated to go up by 5% to $124.3 million due to changes in debt levels.

Peer group’s estimated earnings

For United Parcel Service (UPS), analysts estimate a 5% rise in adjusted earnings for fiscal 2017 to $6.0 per share. They anticipate that Old Dominion Freight Line’s (ODFL) fiscal 2017 earnings will grow 16.2% to $4.14 per share.

SAIA (SAIA) is expected to report earnings of $2.2 per share for fiscal 2017, indicating a growth of 17%. The Reuters-surveyed analysts project a 26.2% rise in YRC Worldwide’s (YRCW) adjusted earnings to $0.82 per share in fiscal 2017.

Investors interested in the transportation space can consider the iShares US Industrials ETF (IYJ), which has 4.3% of its total holdings in major US courier companies.


More From Market Realist