Analysts Expect a Double-Digit YoY Fall in FedEx’s Q4 Earnings


Jun. 4 2019, Updated 1:17 p.m. ET

Fourth-quarter expectations

Analysts expect FedEx (FDX) to report a double-digit YoY (year-over-year) fall in its earnings in the fourth quarter of fiscal 2019. In the quarter, analysts expect its EPS to fall 16.7% YoY to $4.93.

The delivery giant, which is scheduled to report its fourth-quarter earnings results on June 25, has a mixed earnings surprise history. In the last eight quarters, it has surpassed analysts’ expectations on five occasions, and it’s missed expectations three times.

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Factors at play

Analysts expect sluggish revenue growth along with higher operating expenses and increased costs associated with the company’s TNT Express integration to hurt its fiscal 2019 fourth-quarter earnings results. For the quarter, analysts expect the company’s revenue to come at $17.9 billion, which implies a potential YoY rise of 3.3%.

The company’s revenue growth has slowed significantly since the third quarter. In the quarter, FedEx’s revenue rose just 2.9% YoY, its lowest growth in the last 14 quarters.

The company said during its third-quarter earnings release that the ongoing trade dispute between the world’s two largest economies had weakened its delivery and logistics business in China. Additionally, weakness in the FedEx Express segment due to the economic slowdowns in Europe and Asia—particularly in China—hurt its bottom line results.

The scenario has worsened since the third quarter of fiscal 2019, as the trade dispute between the United States and China has escalated in recent months. The countries raised import tariff rates on over $260 billion worth of each other’s goods in May.

Additionally, analysts believe higher integration-related expenses for TNT Express and increased investments in facility upgrades could weigh on FedEx’s fourth-quarter bottom line results. Moreover, the company’s pretax fourth-quarter expenditures are likely to increase due to its voluntary buyout scheme announcement in the third quarter.

Most of FedEx’s peers will report their second-quarter earnings results in July. Analysts’ second-quarter EPS expectations for United Parcel Service (UPS) reflect a YoY fall of 10.3%. On the other hand, EPS estimates for Old Dominion Freight Lines (ODFL) and XPO Logistics (XPO) signify YoY rises of 7.9% and 8.1%, respectively.

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