FedEx Earnings: Profit and Sales Top Views but Outlook Hurts Stock

FedEx earnings
FedEx earnings

FedEx (FDX) earnings beat Wall Street's expectations by a penny a share as the world's second-largest shipping company after UPS (UPS) enjoyed brisker business on the back of global economic recovery, but a tepid outlook hurt the stock. Market watchers key in on FedEx and UPS earnings because their worldwide shipping networks make them especially attuned to global demand.

The Memphis-based company said Wednesday that it swung to a fiscal fourth-quarter profit of $419 million, or $1.33 a share, from a year-ago loss of $876 million, or $2.82. Analysts, on average, forecast FedEx earnings at $1.32 a share, according to data from Thomson Reuters. Excluding items in the year-ago period, the the company would have recorded earnings of 64 cents a share in the final quarter of fiscal 2010. Analysts typically back out one-time charges and items, so in the Street's view FedEx's year-over-year quarterly profit more than doubled.

FedEx's sales also topped analysts' average forecast. Revenue for the three months May 31 ended rose 20% to $9.43 billion from $7.85 billion a year ago. Analysts were looking for revenue to increase 15% to $9.04 billion.

"FedEx delivered strong results in our fourth quarter, thanks to sequential growth in package volume and our ability to leverage our unique global networks to take advantage of a recovering economy," CEO Frederick Smith said in a press release, "We ended our fiscal year a stronger company, and I am confident FedEx is very well positioned for future revenue and earnings growth."

FedEx's earnings outlook, however, was too conservative for the Street's taste. For the full fiscal year, FedEx forecast earnings in a range of $4.40 to $5 a share, short of analysts' forecast of $5.05, according to Thomson Reuters data. For the current quarter, FedEx earnings forecast is a range of 85 cents to $1.05 a share, while analysts' average outlook stands at $1.03.

Shares in FedEx slipped more than 2% to $81.17 in early trading.

Originally published