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FedEx Stock Earnings Preview

Published 06/22/2016, 01:01 AM
Updated 03/09/2019, 08:30 AM

FedEx Corp (NYSE:FDX)

FedEx Corp Stock Price Chart

FDX is set to report its fiscal fourth quarter 2016 results today after the market close, and the consensus is for earnings of $3.26 per share on revenues of $12.78 billion.

FDX has been consolidating in a sideways channel since mid-March of this year and has the potential to propel higher, with a strong earnings report as fuel for the move.

Let’s take a look at the analyst expectations on this evening’s earnings report.

FDX Analyst Expectations

Analysts at Bank of America Merrill Lynch released an earnings preview note on June 15, 2016 and had the following comments:

Roll in TNT, look for F2018 accretion after integration year FedEx is set to report F4Q16 results on June 21 post-close. In advance of this, and similar to our March 8 scenario analysis, we formally updated our model to include its May 25 closing of its TNT Express acquisition. We also tweak our F4Q16 estimates to reflect its recent debt issuances (Euro and US$), a slightly softer macro environment, a sustained and robust e-commerce market, and the completion of its $1.6 billion profit improvement plan. In early May, FDX issued 3.0 billion ($3.4 billion) of euro- denominated debt with varying maturities (longest-dated maturity is 2027), and interest rates ranging from 0.5% to 1.625%, for its 4.4 billion purchase of TNT. The addition of this business would lead to nearly 20% revenue growth in F2017, its highest year-on- year growth rate in more than 20 years, exceeding 2005’s growth following the acquisition of Kinko’s. Given TNT’s tight margins (2015 operating profit was a mere 38 million on 6.9 billion of revenue, for a 0.5% operating margin), we expect TNT to have a negligible impact on F2017 EPS, with sizeable accretion potential in F2018.

About FedEx Corp.

FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The company’s FedEx Express segment provides various shipping services for the delivery of packages and freight; international trade services specializing in customs brokerage, and ocean and air freight forwarding services; international trade advisory services, such as assistance with the customs-trade partnership against terrorism program; and customs clearance services, as well as global trade data, an information tool that allows customers to track and manage imports.

This segment also publishes customs duty and tax information in various customs areas; and offers supply chain solutions, including critical inventory logistics, transportation management, and temperature-controlled transportation services. Its FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services; and consolidates and delivers high volumes of low-weight and less time-sensitive business-to-consumer packages. The company’s FedEx Freight segment offers less-than-truckload freight services, as well as freight-shipping services. As of May 31, 2015, this segment operated approximately 65,000 vehicles and trailers from a network of approximately 370 service centers.

Its FedEx Services segment provides sales, marketing, information technology, communications, customer service, and other back-office support services; Web-enabled mobile devices, which allows customers to track the status of packages, create shipping labels, get account-specific rate quotes, and access drop-off location information; access to copying and digital printing through retail and Web-based platforms, signs and graphics, professional finishing, computer rentals, and a range of ground shipping and time-definite express shipping services; and packing services, and packing supplies and boxes. The company was founded in 1971 and is based in Memphis, Tennessee.

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