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FedEx Beat the Q2 2019 Earnings and Revenue Estimate

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FedEx’s Q2 2019 earnings

FedEx (FDX) announced its earnings for the second quarter fiscal 2019 on December 18. The company posted an adjusted EPS of $4.03, which beat analysts’ estimate of $3.94. On a YoY (year-over-year) basis, FedEx’s second-quarter adjusted earnings rose 26.7% from $3.18 per share compared to fiscal 2018.

The reported earnings were $3.51 per share in the second quarter—up 23.6% from $2.84 per share in the second quarter of 2018. Apart from higher revenues, the company’s second-quarter bottom-line results also benefited from the lower statutory income tax rate. FedEx revealed that the lower tax rate benefited its earnings by $0.59 in the last quarter.

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Revenues

In the second quarter, FedEx’s revenues were $17.8 billion—compared to $16.3 billion in the second quarter of 2018, which represents a YoY rise of 9.3%. FedEx also beat analysts’ revenue estimate of $17.7 billion.

The company recorded a revenue expansion in all of its reporting segments in the second quarter of fiscal 2019. Efficient pricing strategies, superior volume growth at FedEx Ground, and FedEx Freight’s increased yields, driven by higher base rates and positive fuel surcharge revenues, led to the high single-digit revenue rise in the last quarter.

Vertical revenues

FedEx has four reportable segments—FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. In the second quarter, FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services registered YoY growth of 5.8%, 13.6%, 21.9%, and 3.1%, in their respective revenues. FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services’ share in the total revenues before intersegment eliminations were 56%, 30%, 11%, and 3%, respectively.

Peers’ EPS expectation

Most of FedEx’s peers (IYT) are scheduled to report their fourth-quarter results in January. Analysts’ fourth-quarter revenue expectations for UPS (UPS), Old Dominion Freight Lines (ODFL), and XPO Logistics (XPO) depict a YoY growth of 6.3%, 13.9%, and 8.4%, respectively. The earnings estimates for UPS, Old Dominion Freight Lines, and XPO Logistics signifies a YoY increase of 14.4%, 46.2%, and 84.4%, respectively.

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