As FedEx has said, its good performance resulted from strong demand in its services, volume growth in its international priority, and U.S. domestic residential package services.
On Tuesday, logistics giant FedEx Corporation (NYSE: FDX) delivered its fiscal Q1 earnings report. The company managed to beat Wall Street expectations, which made FedEx shares to explode. On Tuesday, FDX stock closed 0.14% up, at $236.67 per share. In the pre-market today, it has gained 9.02% by the moment of writing to $258.02.
Wall Street analysts did not expect much from FedEx. As Zacks Investment Research predicted, the firm would see a 16.7% decline in earnings, to $2.54 per share. In addition, the revenue was expected to increase by 2.4% to $17.46 billion. According to FactSet analysts, FedEx was expected to report adjusted fiscal Q1 earnings of $2.70 a share on sales of $17.6 billion. Consensus estimates called for $2.69 in EPS and $17.55 billion in revenue. But FedEx blew away all the forecasts. The firm reported $4.87 in earnings per share and $19.3 billion in revenue. This is 60% up from the year-ago quarter when the company reported $3.05 in EPS and $17.05 billion in revenue.
FedEx Fiscal Q1 Earnings: Comments
As FedEx has said, such a performance resulted from strong demand in its services, volume growth in its international priority, and U.S. domestic residential package services.
CEO Frederick Smith said:
“Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies”.
The company said they would not be providing an earnings forecast for the fiscal 2021 full year. However, it raised its capital spending outlook for the year by $200 million to $5.1 billion to boost capacity and support increased volume.
FedEx CFO Alan Graf commented:
“While business demand improved in the first quarter, continued uncertainties cloud our ability to forecast full-year earnings. However, we expect to continue to benefit from our strong position in the U.S. and international package and freight markets, yield improvement opportunities and cost management initiatives.”
FedEx Preparing for Holiday Season Demand
On Monday, FedEx announced its plan to hire more than 70,000 seasonal people to handle the 2020 holiday season demand. The company believes it will be ‘unprecedented’.
“As our team of more than 500,000 team members is busy preparing to deliver the holidays, we once again expect to see a large number of packages traverse our global network over the 2020 peak holiday shipping season”.
In addition to recruiting new employees, FedEx is also planning to increase its shipping rates by an average of 4.9% in January 2021. These rate changes will enable FedEx to continue investing in service enhancement, fleet maintenance, technology innovations, and other areas to serve customers more effectively and efficiently.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.