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Did FedEx Beat Analysts’ Revenue Estimates in the First Quarter?

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FedEx’s first-quarter revenues

We’ll start FedEx’s (FDX) post-earnings series by looking into its first-quarter 2019 revenue. The company’s first quarter revenue was $17.0 billion, which beat analysts’ estimate of $16.8 billion by 1%. In the same quarter of fiscal 2018, the parcel delivery giant’s revenue stood at ~$15.3 billion, reflecting an 11.5% YoY (year-over-year) rise. The double-digit revenue growth was due to increased volumes, higher yields across segments, and lower taxes.

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Segment-wise revenue

FedEx has four reportable verticals: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. In the first quarter, FedEx Express’s share in total revenue before intersegment eliminations was 56.2%, down 0.9% from 57.1% in the first quarter of 2018.

FedEx Ground accounted for 29.3% of total revenue before eliminations in Q1 2019. The segment’s share was up 0.4% from 28.9% in Q1 2018. FedEx Freight and FedEx Services accounted for 11.9% and 2.5% of total revenues, respectively, before elimination in the first quarter. FedEx Freight revenue was up 0.6% YoY in Q1 2019, whereas FedEx Services revenue was down 0.2% YoY.

Management’s revenue outlook

FedEx expects revenue to grow ~9% YoY in fiscal 2019. In the words of Alan Graf, FedEx’s executive vice president and CFO, “We are reaffirming our revenue growth target of approximately 9% and adjusted operating margin of approximately 8.5%. These forecasts assume moderate economic growth and stability in global trade. Our adjusted forecast is before year-end mark-to-market retirement plan accounting adjustments and excludes expenses related to the TNT Express integration as applicable.”

A look at IYT

78 ETFs include FedEx in their portfolio. The iShares Transportation Average ETF (IYT) invests 12.87% of its portfolio in the stock. Key transportation and logistics companies included in IYT’s holdings are Norfolk Southern (NSC) with a weight of 9.73%, Union Pacific (UNP) with a weight of 8.60%, and JB Hunt Transport Services (JBHT) with a weight of 6.44%.

In the next part, we’ll review FedEx’s Express segment performance.

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