FedEx Profits Almost Double, Revenue Growth Accelerates, But FDX Stock Falls

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FedEx (FDX) posted fourth quarter earnings that were roughly in line with analysts’ opinions, as revenue growth picked up again. But FDX stock fell in trading overnight.




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FedEx revenues

Estimates: Wall Street expects FedEx earnings to nearly double to $ 5.02, although some forecasts have called $ 5 a share. Revenue increased 24% to $ 21.52 billion.

Results: FedEx profits jumped 98% to $ 5.01 per share. Come back after the closing. Revenue increased 30% to $ 22.6 billion, the fourth consecutive quarter of accelerating sales growth.

FedEx expects earnings per diluted share for fiscal 2022 of $ 20.50 to $ 21.50. This is before accounting adjustments to the MTM pension plan and excluding estimated TNT Express integration expenses and various realignment costs.

At the midpoint of $ 21, FedEx’s earnings forecast is above the FactSet consensus of $ 20.63.

However, FedEx plans to increase capital spending by $ 7.2 billion in fiscal 2022, a significant jump from 2021. This could put pressure on profit margins.


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FedEx Stock

FedEx shares fell 4% amid the extended trading. Shares of the shipping giant closed 2.1% higher at 303.69 during Thursday’s stock trading, rebounding slightly from the 50-day intraday line.

FedEx shares broke a 294.86 cup buy point with a handle in early May. It is technically in the buy range up to 309.60, according to MarketSmith’s chart analysis. FDX stock hit 319.90 on May 27, but then fell to 282.01 on June 18 before rebounding this week.

At this point, investors may want to use a bounce on the 50 day / 10 week line as a possible entry point, rather than the old base breakout. FDX could form a new base from the May 27 high.

The relative strength line is dull after recovering for much of 2020. A rising RS line, the blue line in the chart shown, means that a stock is underperforming the S&P 500 Index.

Meanwhile, UPS (UPS) shrank by 2% after a few hours.

UPS stock closed up 1% at 206.09. UPS stock has a flat base with a buy point of 219.69. Stocks consolidated following the explosion in the UPS earnings report in late April. Like FedEx, UPS stocks found support at the 50-day line, creating a possible buying opportunity.


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FedEx growth is a strain

For the last four consecutive quarters, FedEx earnings and revenues have exceeded Wall Street expectations. Pandemic lockdowns have triggered a flood of online shopping, allowing shippers to charge higher rates that are more typical of vacations.

But FedEx and UPS stocks were strained as growth in e-commerce weighed on capacity and profit margins.

Earlier this month, FedEx suspended approximately 1,400 freight forwarding customers in a shock measure aimed at reducing network congestion, the the Wall Street newspaper mentionned.

Among the shipping giants, FedEx has particularly struggled to deliver packages on time, WSJ added, citing industry data.

FedEx responded that it “continues to experience a peak-like increase in parcel volume due to the explosive growth in e-commerce.”

UPS and FedEx again increased delivery surcharges in May and June.

Meanwhile, the key customer Amazon (AMZN) became more of a delivery and logistics rival, hitting FedEx stock. The Memphis-based shipper acquired the ShopRunner e-commerce platform after a very public feud with Amazon.

In 2019, FedEx refused to renew some of Amazon’s domestic contracts. Next, Amazon blocked sellers from using FedEx for certain deliveries.

Amazon stock fell 1.6% to 3,449.08. Stocks are near a buy point of 3,554.10 from a cut base from late April, although AMZN stock has moved sideways since last September.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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