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FedEx Fell ~6% after Lower Q3 Earnings and Revenues


Mar. 20 2019, Published 8:08 a.m. ET


FedEx (FDX) stock fell nearly 6% during the extended trading session on March 19 after the company reported dismal third-quarter results on March 19. The company’s third-quarter top and bottom lines fell short of analysts’ expectations.

The company posted an adjusted EPS of $3.03, which missed analysts’ estimate of $3.11 and fell 18.5% from the adjusted EPS of $3.72 in the third quarter of 2018. Lower-than-expected revenue growth, increased expenses related to the TNT Express integration, and higher operating costs hurt FedEx’s bottom-line results in the third quarter.

In the third quarter, FedEx’s revenues were $17 billion—compared to $16.5 billion in the third quarter of 2018—a rise of 2.9% YoY (year-over-year). The company’s revenue growth rate was the lowest in the last 14 quarters. FedEx’s quarterly revenues were below analysts’ expectation of $17.7 billion.

During the earnings release, FedEx’s chairman and CEO, Frederick W. Smith, said, “Our third quarter financial results were below our expectations and we are focused on initiatives to improve our performance.”

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Weakness in the FedEx Express segment weighed on the company’s overall top-line growth. The division registered a 1% YoY decline in its revenues due to the economic slowdown in Europe and Asia—particularly China. The company noted that the ongoing trade dispute weakened the delivery and logistics business in China.

Excluding the Express business, FedEx recorded revenue expansion across all of its reporting segments in the third quarter. In the third quarter, FedEx Ground, FedEx Freight, and FedEx Services registered growth of 9%, 8.5%, and 1.3% YoY in their respective revenues. FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services’ share in the total revenues before intersegment eliminations were 55%, 32%, 11%, and 2%, respectively.

Peers’ EPS expectations

Most of FedEx’s peers (IYT) are scheduled to report their first-quarter results in April. Analysts’ first-quarter revenue expectations for UPS (UPS), XPO Logistics (XPO), and Old Dominion Freight Lines (ODFL) depict growth of 4%, 2.4%, and 9.1% YoY, respectively. The earnings estimates for UPS and XPO Logistics signifies a decline of 7.1% and 16.1% YoY, respectively. Old Dominion Freight Lines is expected to report EPS growth of 22.7%.


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