FedEx Missed Q1 Earnings Estimates but Raised Fiscal 2019 Outlook



FedEx’s first-quarter earnings

US-based global parcel delivery company FedEx (FDX) announced its fiscal 2019 first-quarter earnings after market hours on September 17. The company missed analysts’ adjusted EPS estimate by 9%. FedEx’s adjusted EPS in the quarter came in at $3.46 against analysts’ expectations of $3.81. Compared with adjusted EPS of $2.51 in the first quarter of 2018, the company’s EPS was up ~38% YoY (year-over-year) in Q1 2019.


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Why FedEx stock declined

On September 17, FDX stock opened at $257.28, up 0.8% from the previous session’s close of $255.44. The company’s stock rose to $259.25. However, the stock declined to $253.67 before closing at $255.73, up marginally from the previous session’s close. The stock declined ~4.2% to $245.06 later on September 18. Concerns regarding FedEx’s higher labor costs along with the US-China trade tussle weighed on the global parcel delivery company’s stock price.

FedEx and arch-rival United Parcel Service (UPS) operate in China. They will likely see a substantial impact on their business if the ongoing US-China trade and tariff war escalates. On September 17, UPS stock closed at $118.24, down 0.70% from the previous session’s close. In the last year, while FedEx delivered 18.6% return to shareholders, UPS’s return was just 1.3%. LTL (less-than-truckload) services providers’ returns in the past year are as follows:

During the same period, the SPDR S&P 500 ETF (SPY), an indicator of the broader market, returned 16.5%. The ETF invests 0.24% of its portfolio in FedEx.

FedEx raised 2019 earnings outlook

For fiscal 2019, FedEx now expects diluted EPS of $17.20–$17.80, up from the prior forecast of $17.0–$17.60. This EPS forecast excludes TNT Express integration expenses and MTM (mark-to-market) retirement plan accounting adjustments.

In this series, we’ll go through the company’s segmental performance and then turn to analysts for their recommendations on FedEx and its peers.


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