Close this search box.

FedEx Blows Away Earnings Expectations, Drops After Hours

FedEx Blows Away Earnings Expectations, Drops After Hours

Yet again, FedEx blew away quarterly earnings expectations, following increased shipping and logistic gains from the pandemic’s at-home move.

Yet again, FedEx blew away quarterly earnings expectations, following increased shipping and logistic gains from the pandemic’s at-home move.

Credit | Coinbase

The Memphis-based logistics and transportation company, FedEx reported yet another amazing quarter after Thursday the 17th’s close. Yet, investors seem to be disappointed as the stock is down over 3.6% after hours, even with amazing quarterly results.

FedEx reported $4.84 in per-share earnings, with $20.6 billion in total sales. Wall Street was only looking for $4.01 in earnings on $19.4 billion in sales. That means a 21% surprise gain in earnings per share, with a 6% surprise with sales. Usually that kind of surprise would mean a large jump in a stock’s price.

But things have been exploded at FedEx which may have changed investors’ opinions towards the company. Just this year, second quarter estimates for the company sat at $2.37, less than half of what FedEx reported this quarter.

Their stock, FDX is also up almost 100% from the beginning of the year up until now, buoyed by increasing earnings and sales from the sudden stay at home shopping trends, shoving delivery services into the partial forefront of COVID-related boosts.

That explosion in e-commerce shopping, combined with not many other shipping alternatives, have helped both earnings and FedEx’s stock, with shares up 19% in the last 3 months alone. Both the earlier 100% (actually 92%), and the 19% for the last three months, have beat the S&P 500 and the Dow Jones Industrial Average.

Most of FedEx’s business divisions have performed equally as well, including gains in:

  • their Express business, the most heavily focused division, with $943 million in operating profit with a 9.1% profit margin, compared to a previous $710 million and 7.7%;
  • their FedEx Ground, with $834 million in profit at an 11.8% profit margin;
  • and lastly, their Freight division, with $274 million in profits.

Both FedEx and their main competitor, UPS, have had massive COVID related boosts, specifically from the at home e-commerce trail, but that’s where uncertainty comes in.

While this was the first quarter for this company to hit $20 billion in quarterly sales, FedEx cites continued uncertainty of the pandemic as a possible business pain. They also didn’t provide an earnings forecast for 2021, as their business could either explode even more if the pandemic went on further, or could completely implode if at-home orders and stays ended due to the vaccine.

Chief Financial Officer Michael Lenz said, “While the overall environment remains uncertain, we expect earnings growth in the second half of fiscal 2021 driven by the anticipated heightened demand for our services as we continue to execute on our strategic priorities.”

UPS Earnings

Statural Bites

Sign up for our newsletter to get bite-sized news about all five of our categories.

The earnings release also stated that FedEx Ground daily package volume hit a high, climbing 29% to an average 12.3 million daily packages having been delivered through FedEx. This surprisingly correlated with increased revenue per package, up 7% to $9.42, which usually works inversely, as the more packages, the cheaper per.

Even with the possible drop of the company’s revenues over the next year, they’re still uniquely suited to help provide a transition to e-commerce, which has been slowly accelerating, pushed forwards some by the pandemic. While retail certainly won’t die soon, and e-commerce certainly won’t take over all retail, there’s a large chance that FedEx and its competitors will continue to build off of e-commerce’s gain across the globe.