FedEx Corporation (NYSE: FDX) reported a record quarter of holiday deliveries after the market closed on Tuesday, continuing the company’s recent momentum as it attempts to fend off oncoming delivery competition from Amazon.com ( AMZN) in 2018.
FedEx reported adjusted earnings per share of $3.72 on revenue of $16.5 billion in the fiscal third quarter. Both numbers topped consensus analyst expectations of $3.11 and $16.16 billion, respectively.
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FedEx also says FedEx Ground had record volume during the holiday season, with average daily package volume up 6 percent from a year ago. Ground revenue on the quarter was $5.44 billion, up 11 percent. Freight revenue was $1.69 billion, up 14 percent from a year ago.
In addition, the company raised its full-year EPS guidance from a previous range of $12.70 to $13.30 to a new range between $15 and $15.40. FedEx says its new earnings guidance does not include year-end pension accounting adjustments, remeasurement of U.S. deferred tax liability, expenses related to TNT Express integration or legal costs related to FedEx Trade Networks.
FedEx says it expects strong operating performance across all of its transportation segments in the fourth quarter.
Oppenheimer analyst Scott Schneeberger says FedEx investors shouldn’t be fearful of a potential delivery pricing war or rising costs.
“The company appears to have executed well during the formidable 2017 peak season, delivering strong service levels as it seemingly achieved its operational/financial objectives,” Schneeberger says. “Factoring FedEx’s revenue quality/pricing focus, we anticipate continued Ground segment margin expansion.”
CFRA analyst Jim Corridore says FedEx is well-positioned to boost operating income by $1.7 billion by fiscal 2020.
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“The company is likely to benefit from improvement in the U.S. and global economies over the next year, which will lead to increased volumes across FDX’s entire network,” Corridore says. “Online sales recently reached a tipping point, making up more than half of holiday retail sales, and we expect it to continue to grow, benefiting FDX.”
Oppenheimer has an “outperform” rating and $290 price target for FedEx. CFRA has a “strong buy” rating and $300 target for FDX stock.
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FedEx Corporation (FDX) Delivers a Holiday Quarter Earnings Beat originally appeared on usnews.com
