FedEx Corp. (NYSE: FDX | FDX Price Prediction) reported its most recent quarterly results after markets closed Tuesday. The firm said that it had $2.51 in earnings per share (EPS) and $17.3 billion in revenue, which compares to consensus estimates that called for $2.76 in EPS and $17.58 billion in revenue. In the fiscal second quarter of last year, it posted $4.03 in EPS and $17.82 billion in revenue.
Overall, operating results declined due to weak global economic conditions, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer (that would be Amazon.com), a continuing mix shift to lower-yielding services and a more competitive pricing environment.
FedEx is lowering its fiscal 2020 earnings forecast as the company’s revenue outlook has been reduced yet again due to increased trade tensions and additional weakening of global economic conditions since the company’s initial fiscal 2020 forecast in June.
As a result, FedEx updated guidance for the fiscal 2020 full year. The company now expects to see EPS in the range of $10.25 to $11.50. The consensus estimates are $12.03 in EPS and $69.85 billion in revenue for the fiscal year.
Frederick W. Smith, FedEx board chair and CEO, commented:
Fiscal 2020 is a year of continued significant challenges and changes for FedEx, particularly in the quarter just ended due to the compressed shipping season. We have significantly enhanced our e-commerce capabilities with strategic initiatives including year-round seven-day FedEx Ground delivery, enhanced large package capabilities and the insourcing of FedEx SmartPost packages. These changes have been well-received by the marketplace as reflected in our record volumes this peak season. While we have experienced some higher-than-expected expenses this quarter, we forecast FedEx Ground operating margins to rebound to the teens in our fiscal fourth quarter as the bow wave of costs for these changes is absorbed.
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Shares of FedEx closed at $163.27, in a 52-week range of $137.78 to $199.32. The consensus price target is $173.12. Following the announcement, the stock was down 4% at $157.00 in the after-hours session.
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