FedEx Company Earnings Okay, Forecast Not So Much

FedEx Corporation logo
FedEx Corporation logo

FedEx Corp. (NYSE: FDX) reported fourth-quarter and full fiscal year 2013 results before markets opened this morning. The package delivery service reported adjusted diluted earnings per share (EPS) of $2.13 on revenues of $11.4 billion. In the same period a year ago, FedEx reported EPS of $1.99 on revenue of $11.0 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.96 and $11.44 billion in revenue.

On a GAAP basis, EPS totaled $0.95, which excludes employee buyout costs and a noncash impairment charge. A year ago the company's GAAP EPS totaled $1.73.

For the full year, FedEx posted adjusted EPS of $6.23 on revenues of $44.3 billion, compared with EPS of $6.59 and revenues of $42.7 billion in 2012. The consensus estimates called for annual EPS of $6.04 on revenues of $44.39 billion.

The company's guidance for its 2014 fiscal year projects EPS growth of 7% to 13% above 2013 results. FedEx noted that beginning with this report it would "focus on full year projections with quarterly updates." Based on 2013 EPS, FedEx is projecting EPS for 2014 in the range of $6.67 to $7.04. The consensus estimate calls for full-year EPS of $7.36.

As a bellwether for the economy, FedEx's predictive power points to continuing softness. The company's CFO said:

We remain focused on improving margins and returns in all of our businesses. The pace of that improvement is expected to be moderate in fiscal 2014 and then accelerate in fiscal 2015. Our profit improvement program is progressing, but we continue to see the effects of customers selecting lower-rate international services. FedEx Express will further decrease capacity between Asia and the United States in July.

The company's full-year EPS forecast says all that needs to be said about FedEx's view of the coming year. A very slowly improving global economy is weighing heavily on revenues and profits. Adjusted operating income and margins in the company's freight segment were flat with last year in the fourth quarter, and FedEx essentially does not see any significant change in that performance.

Shares are up about 0.8%in premarket trading this morning, at $99.48 in a 52-week range of $83.92 to $109.66. Thomson Reuters had a consensus analyst price target of around $114.75 before today's results were announced.

Filed under: Investing Tagged: FDX

Originally published