Is A Beat In The Cards For FedEx (FDX) Stock In Q4 Earnings?
Zacks Investment Research | Jun 13, 2018 10:37PM ET
FedEx Corporation (NYSE:FDX) is set to release fourth-quarter fiscal 2018 results, after the closing bell on Jun 19.
In the third quarter of fiscal 2018, earnings of $3.72 per share comfortably surpassed the Zacks Consensus Estimate of $3.08. The bottom-line figure also surged 58.3% on a year-over-year basis. Results were aided by higher revenues.
We expect this S&P 500 company to outperform earnings estimates in the quarter-to-be reported as well. Strong e-commerce growth is likely to aid results. Notably, the Zacks Consensus Estimate for fiscal fourth-quarter earnings moved north 3.5% over the last 30 days, reflecting investor optimism surrounding the stock.
Also, FedEx’s price performance in the last three months has been impressive. While the stock has gained 6.3%, the Zacks S&P 500 composite increased 1%.
Three-Month Price Comparison
Given this backdrop, let’s delve deeper to unearth the factors that are likely to influence the company’s fourth-quarter results:
We expect the company to deliver solid results in the fiscal fourth quarter, courtesy of e-commerce growth. Earlier in 2018, FedEx acquired P2P to boosts its e-commerce portfolio.
In fact, growth is expected across all major divisions of the company. The Zacks Consensus Estimate for revenues at the FedEx Express (including TNT Express) division stands at $10,056 million, much higher than the year-ago figure of $7,180 million. For the Ground and the Freight divisions, the consensus estimate for revenues is pegged at a respective $5,009 million and $1,859 million above the year-ago figures of $4,678 million and $1,696 million.
Volume expansion and higher base rates are likely to boost results at the Ground and the Express units. The freight unit should benefit from average daily less-than-truckload shipment growth. For fourth-quarter fiscal 2018, the company envisions adjusted operating margin (minus TNT Express integration expenses) at the FedEx Express segment between 9.9% and 10.4%. At FedEx’s Ground and Freight segments, the metric (on a reported basis) is estimated between 17-17.5% and 8-9%, respectively.
Lower tax rates following the introduction of the Tax Cuts and Jobs Act late last year, are also expected to boost the bottom line in the soon-to-be-reported quarter. However, headwinds like high costs might hurt the bottom line in the same period. We expect the company to provide a detailed guidance for fiscal 2019 on the conference call.
What Does the Zacks Model Unveil?
Our quantitative model too shows that FedEx is likely to beat earnings in the fiscal fourth quarter because it has the perfect combination of two key ingredients — a positive Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.