FedEx reaffirmed its 2015 outlook calling for EPS of $8.50 to $9.00 and capital spending of $4.2 billion, which the company said at the end of its 2014 fourth quarter was destined primarily to acquire new airplanes and to expand the FedEx Ground network. The outlook assumes a “modest” net benefit year-over-year from lower fuel costs and continued moderate global economic growth. The consensus estimates for the 2015 call for EPS of $9.12 on revenues of $47.9 billion.
The company’s CEO said:
FedEx posted strong results and a higher operating margin in the second quarter, with continued growth in volumes and base yields in each of our transportation segments.
The company said that share repurchases added $0.16 to diluted EPS in the second quarter.
ALSO READ: 10 Dying and 10 Thriving U.S. Industries
Jet fuel costs fell from $1.12 billion in the first quarter to $1.05 billion in the second quarter, even though the company used nearly 5,000 gallons more fuel in the second quarter. The cost per gallon fell from $3.078 in the first quarter to $2.832 in the second, the lowest per gallon cost in at least three and a half years.
Revenue yield per package fell sequentially from $21.46 to $20.97, and higher package volume apparently did not boost revenues as much as analysts expected.
Both FedEx and competitor United Parcel Service Inc. (NYSE: UPS) are set to begin calculating shipping charges on a “dimensional weight” basis beginning around January 1, 2015. Under this pricing scheme, shippers pay more for larger packages regardless of how much the package weighs. The change is not coming a moment too soon it appears. U.S. revenue per freight pound fell from $1.24 in the first fiscal quarter to $1.16, and companywide revenue per pound fell sequentially from $1.48 to $1.42, its level in the second quarter of the prior fiscal year. Dimensional weight pricing and even lower fuel costs should provide a nice boost for the current quarter’s revenues.
ALSO READ: The 7 Worst Investments of 2014
Because both EPS and revenues missed consensus estimates Wednesday morning, share prices are in for a take-down Wednesday. Shares were down about 4.6% in premarket trading, at $166.25 in a 52-week range of $128.17 to $183.51. The consensus price target from Thomson Reuters was around $163.60 before results were announced.
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.