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FedEx Corp reported after the close Monday missing expectations on costs and wage rises giving us insight into the economy and the threats from online retail giant $AMZN and rivals $UPS and DHL. $ORCL lifted its adjusted EPS guidance.


fedex holiday

FedEx has been a star of the the bull market rally this year but now appears threatened.

FedEx Corporation NYSE: FDX Missed Earnings After Close Monday

 $3.46 Missed $3.78 EPS But $17.1 billion Beat $16.88 billion forecast in revenue. 

Earnings 

FedEx Earnings for the fiscal first quarter rose 40% to $835 million or $3.10 per share. Adjusted EPS soared by 37.8% to $3.46.on revenue of $17.1 billion which missed expectations of $3.78 a share but beat revenue expectations of $16.88 billion.

$FDX accelerated wage increases for certain hourly employees in Q4 due to the enactment of GOP tax cuts. Combined, these items hurt results by $170 million, or 48 cents a share. FedEx recognized substantially higher variable compensation accruals during Q1, as last year's results were hurt by the NotPetya cyberattack at TNT Express.

FedEx Corporation NYSE: FDX

Market Reaction After hours $250.21 −5.52 (-2.16%)

"As expected, the quarter's results were affected by our decision to invest in our team members following the passage of the Tax Cuts and Jobs Act," said CFO Alan Graf in a statement. "We remain committed to increasing earnings, margins, cash flows and returns this year."

Highlights

  • FedEx Ground revenues increased by 13%
  • FedEx Freight revenues rose by 18%.

FDX Earnings Q1 18

Outlook

FedEx raised its full-year EPS view to $17.20-$17.80 from a prior forecast of $17.00-$17.60, with the midpoint above consensus for $17.31. $FDX reaffirmed its revenue growth outlook of 9% and operating margin estimate of about 7.9%.

United Parcel Service ($UPS) reported an 8.2% increase in its second-quarter earnings to $1.71 per share beating Wall Street estimates last week.  UPS's revenue increased by 9.6% helped by growth across all segments.

Analysts see FedEx and UPS being be affected by Amazon’s ($AMZN) venture into the delivery space. 

Sources: FedEx, AlphaStreet

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