Fedex Reports a Mixed Second Quarter
In the midst of taper talks and a roaring market, everyone’s favorite shipping company Fedex (NYSE:FDX) reported its quarterly results before the market open on Wednesday. FedEx earned $500 million, or $1.57 a share, in the second quarter ended Nov. 30, versus $438 million, or $1.39, in the second quarter of last year. These results came in lower than the street had anticipated. Analysts covering the company, on average, expected Fedex to generate only earnings of $1.64 per share.
On the top line the company saw mixed results. FedEx announced its revenue from its express shipping segment dropped to $6.84 billion from last year`s $6.86 billion. The unit has suffered as customers have choosen slower, cheaper delivery options. FedEx has attempted to revamp routes and trim capacity to Asia and other international markets to lessen the decline. Efficiency metrics for the company improved slightly. Operating margin was 4.8 percent, versus 3.4 percent last year. Operating income jumped 42 percent to $326 million. Total revenue was $11.40 billion, just short of analysts’ estimates of $11.43 billion. While the results on the top line were short of estimates there was a bright spot, the company’s ground shipping business watched its revenues jump 10 percent to $2.85 billion.
Traders look towards the company as an economic bellwether because its results reflect economic activity and forecast retail sales for much of the industry. The company sees full-year earnings per share growth between 8 percent and 14 percent, above last year. Previously Fedex was only looking for growth between 7 percent and 13 percent.
While some of that earnings per share gains could be attributed to the company’s repurchase of 10 million shares year to date, FedEx has also said it expects shipping volumes to pick up during the holiday season.
Shares of the company did alright during an extremely positive day for the averages. At the close, Fedex shares closed up by 0.45% to $139.72.
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