FedEx Delivers in Q4, And Then Some

FedEX Corp. (NYSE: FDX | FDX Price Prediction) reported fiscal fourth-quarter financial results after markets closed Tuesday. The firm said that it had $2.53 in earnings per share (EPS) and $17.4 billion in revenue, compared with consensus estimates that called for $1.52 in EPS and $16.49 billion in revenue. The same period from last year had $5.01 in EPS and $17.81 billion in revenue.

Note that net income includes a tax benefit of $71 million related to the CARES Act.

Management said that virtually all revenue and expense line items were affected by COVID-19 during the quarter. While commercial volumes were down significantly due to business closures across the globe, there were surges in residential deliveries at FedEx Ground and in transpacific and charter flights at FedEx Express, which required incremental costs to serve.

At the same time, FedEx also incurred an increase of $125 million in operating costs related to personal protective equipment and medical/safety supplies, as well as additional security and cleaning services.

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Also worth pointing out is that operating results were negatively affected by one fewer operating weekday, increased costs to expand services, higher bad debt expense, increased self-insurance accruals and the loss of business from a large customer. These factors were partially offset by the strong residential delivery volume growth at FedEx Ground, increased revenue per shipment at FedEx Freight, a favorable net impact of fuel and lower variable incentive compensation expenses.

FedEx noted that it will not be providing an earnings forecast for the fiscal 2021 full year “as the timing and pace of an economic recovery are uncertain.”

FedEx stock closed Tuesday at $140.10, with a 52-week range of $88.69 to $178.50. The consensus analyst price target is $150.67. Following the announcement, the stock was up 7% at $150.19 in the after-hours session.

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