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FedEx gains with modest growth projections

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FedEx gains with modest growth projections

Shares of FedEx Corporation (NYSE:FDX) traded to the upside on Wednesday morning following a strong first quarter. The company was able to beat analyst consensus estimates on both the top and bottom lines despite a mixed economic recovery. The delivery service company posted adjusted diluted earnings per share of $1.53 on revenues of $11,0 billion. To compare these results on a year over year basis, FedEx reported earnings per share of $1.45 on revenue of $10.8 billion. This comparison yields earnings growth of 5.5% during the quarter as revenues increased slightly. FedEx came in slightly better than the street had predicted, analysts were looking for the company to report earnings per shares of $1.50 and $10.9 billion in revenue.

The company reaffirmed its previous earning guidance and earnings per share growth predictions of 7% to 13%. These forecasts take into account only modest growth, the company only expects the American economy to grow at a messily 2.1% in 2014. To combat stalled economic growth, FedEx stated it will raise shipping rates an average of 3.9% for U.S. domestic, U.S. export and U.S. import services beginning January 6, 2014. Changes to shipping rates for FedEx Ground and FedEx SmartPost will be announced later in the year. While the company may not longer be a sexy growth favorite, management has worked hard in eeking out growth in recent years. Despite rising input prices the company was able to increase its operating margins by 3.1% within its express business segment. However, these gains were contrasted with margin weakness in other segments. Margins fell from 18.1% to 17.1% in the Ground segment and were flat at 6.4% in the Freight segment.

Following the report, shares of FedEx traded higher by nearly 3% in the pre-market session to $114 per share. This moves puts shares at yet another 52 week high. Broad market strength has help the company’s shares rise by 20% this year alone.

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