It’s no surprise that FedEx was affected by the recession. Individuals have cut back their spending in many areas, and many companies haven’t been able to live up to analyst expectations this past year or so. However, FedEx has actually been having trouble meeting expectations for much longer than that; only one time in the last eight years has the company provided an annual forecast that matched up with analyst estimates. Today, FedEx announced both their fourth quarter earnings, and reported their forecast for next year. With consumer spending starting to bounce back, was FedEx able to break the trend, or are they still on a slow road to recovery?
FedEx Earnings Soar, but Forecast Fails to Please (FDX)
By: InvestorGuide Staff, dated June 16th, 2010Daily Chart
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Stock Analysis
First, FedEx reported their fourth quarter earnings. The company had a strong jump from the year before, rising from a loss of $876 million to a profit of $419 million. The company earned $1.33 per share, which just met analyst expectations, and fell on the high end of the company’s own projected range of $1.17 to $1.37 per share. Revenue jumped 20% to $9.43 billion, which surpassed expectations of $9.04 billion. So all in all, the fourth quarter was a strong one for FedEx, and indicated that the company had seen a rebound in shipping volume.
Despite these results, the company’s stock has fallen in early trading, and the reason for this seems to be the company’s full year forecast. FedEx forecasted that their earnings next year would fall between $4.40 and $5.00 per share. Analysts, however, had been predicting earnings of $5.05 per share, which falls outside of FedEx’s range. FedEx mentioned a few reasons for their forecast not being quite as high as desired, including higher pension expenses and retirement account contributions, and employee raises which they had discontinued during the recession.
FedEx and its investors, however, do have a few reasons to remain hopeful. FedEx is hopeful that fuel prices will remain relatively stable. Additionally, the company is hopeful that they will see “a continued moderate recovery.” CEO Frederick Smith said that he believed that consumers were too pessimistic about the state of the shipping industry, not realizing that demand was rising significantly in places like India and China as consumers were shopping more and as industry continues to grow. In the most recent quarter, while the daily package volume in the U.S. grew only 1%, it rose 23% on average due primarily to the shipping increases in Asia. So while FedEx may still be having trouble getting their numbers to match with analysts, so far they are carefully navigating these rough conditions and managing to head in the right direction.
FedEx Commentary:
Is FedEx really a bellwether? – Many people believe it, but does the performance of FedEx really predict how the market will move?
Is FedEx really a bellwether? – Many people believe it, but does the performance of FedEx really predict how the market will move?
Cloud storage will fail without WAN Acceleration, so FedEx to the rescue? – FedEx has paired up with Amazon’s (AMZN: Charts, News, Offers) data storage service.
More Stocks in the News:
Financial stocks fall, Fannie, Freddie delist from NYSE – Fannie Mae (FNM: Charts, News, Offers) and Freddie Mac (FRE: Charts, News, Offers) are delisting from the New York Stock Exchange.
Financial stocks fall, Fannie, Freddie delist from NYSE – Fannie Mae (FNM: Charts, News, Offers) and Freddie Mac (FRE: Charts, News, Offers) are delisting from the New York Stock Exchange.
AT&T temporarily suspends iPhone pre-orders – Preorders for the new Apple (AAPL: Charts, News, Offers) iPhone began yesterday, but AT&T’s (T: Charts, News, Offers) issues have caused them to stop taking preorders for now.
