FedEx Fourth Quarter Sales, Higher Earnings Estimates As Ecommerce And Business Spending Rise

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FedEx (FDX) reported fourth quarter sales and profits that beat estimates as the shipping company’s results were boosted by the continued strength of e-commerce and a recovery in international business and shipments.

However, stocks fell more than 3% late in the session as the impression failed to impress some on Wall Street hoping for a stronger pace.

Here are the key metrics from the FedEx report, compared to consensus estimates compiled by Bloomberg:

The Memphis, Tennessee-based company increased sales by 30% from last year, or the fastest pace since at least 2010, based on Bloomberg data dating back more than a decade . Results for the three months ending May were aided by a consumer who still buys heavily online, as well as increased business-to-business shipping spending as vaccinations ramp up and more businesses reopened in the spring.

“Fourth quarter operating results increased primarily due to volume growth and disciplined revenue and portfolio management,” the company said. declared in its income statement. “These factors were partially offset by costs to support strong demand, increased variable compensation costs and higher labor rates.”

The outlook for FedEx has also beaten estimates. The company said it expects annual adjusted earnings to be between $ 20.50 and $ 21.50 per share, excluding certain items, as consensus analysts sought 20.48 $ per share.

Along with high shipping demand, the company also demonstrated strong pricing power, which helped support overall margins and profits for the quarter. FedEx Express parcel and freight standard rates have increased 4.9% on average for many American services at the start of the year, and a number of other surcharges also came into effect later in 2021. This extended a number of surcharges introduced in 2020 because the transport giant passed the costs associated with the higher volumes on to its customers.

A FedEx driver delivers a parcel cart Thursday, May 6, 2021 in New York City. (AP Photo / Mark Lennihan)

And with businesses across industries reporting supply chain constraints and shortages, many customers may have increased spending on the company’s more expensive express shipping options in the fourth quarter, suggested. some analysts. Commercial shipments tend to provide higher margins in general for FedEx than residential shipments, providing another point of strength for the company’s fourth quarter.

“We believe that a strong price trend and a cyclical improvement in B2B [business-to-business] volumes support margin expansion in Ground and Express, ”UBS analyst Thomas Wadewitz wrote in a note before earnings. The company is pricing FedEx shares as a buy, with a 12-month price target of $ 383.

FedEx shares have risen just over 17% year-to-date, surpassing the S&P 500’s 13.6% increase during that period.

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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