FedEx fails to deliver as economy slows
06-20-2007, 10:01 PM
#1
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FedEx fails to deliver as economy slows
Stock price has been hanging in the $106 to $110 range for a very long time, but I remain hopeful of an upward swing. This is another anecdote for people not to put all your eggs in one basket. Diversify.
From Financial Times 06/20/07:
FedEx, the package delivery group, said it expected the weak US economy to pick up in the late summer or early autumn, as it reported poor fourth-quarter earnings that undershot Wall Street expectations.
"We were restrained by a slowing US economy," said Fred Smith, FedEx chairman, president and chief executive. "The weakened industrial sector is currently limiting demand for transportation services."
Net earnings grew 7 per cent to $610m, or $1.96 per share, in the three months to the end of May.
But excluding a 6 cent boost from a settlement with Airbus over the cancellation of a plane order, earnings missed the $1.96 per share expected by Wall Street analysts, according to Reuters estimates.
Revenue was up 8 per cent from last year at $9.15bn.
FedEx is viewed as an economic bellwether because of its extensive transport and delivery network throughout the US, with companies and individuals tending to send fewer packages as conditions worsen.
"We're looking forward to a pick-up, even if it's a slight pick-up, in the fall," said David Bronczek, head of FedEx's express division, its largest.
FedEx results were hit by a drop in US revenues and volumes in express delivery, as the cost of fuel rose and customers moving to cheaper services offset price increases.
The company said it did not expect any improvement in express volumes this year.
Operating income grew 30 per cent in ground transport, as customers shifted from more costly express delivery, where operating income grew 6 per cent.
In freight transport, operating income was down 12 per cent.
The domestic transport and freight industry is struggling in the US.
"The environment is worse than what it was at the low point of the last recession in 2001," said Rick Paterson, UBS analyst. "We are essentially in a domestic freight recession."
FedEx expects earnings in the next quarter to be $1.45 to $1.60 per share, and earnings for this financial year to be $7 to $7.40 per share assuming the US economy improves and oil prices do not rise.
Investors were heartened by FedEx's optimistic economic outlook and earnings prediction, which covered the consensus forecast of $7.33.
"Many people thought they might reduce their guidance more than they did," said James Corridore, an analyst at Standard & Poor's. Shares in FedEx had risen 1.61 per cent to $109.80 by the close.
Earnings growth is expected to miss the company's long-term 10 per cent to 15 per cent earnings growth target because of soft economic growth and the cost investments, the company said. Net income for the year was $2.02bn, up 12 per cent, on a 9 per cent rise in revenue to $35.2bn.
From Financial Times 06/20/07:
FedEx, the package delivery group, said it expected the weak US economy to pick up in the late summer or early autumn, as it reported poor fourth-quarter earnings that undershot Wall Street expectations.
"We were restrained by a slowing US economy," said Fred Smith, FedEx chairman, president and chief executive. "The weakened industrial sector is currently limiting demand for transportation services."
Net earnings grew 7 per cent to $610m, or $1.96 per share, in the three months to the end of May.
But excluding a 6 cent boost from a settlement with Airbus over the cancellation of a plane order, earnings missed the $1.96 per share expected by Wall Street analysts, according to Reuters estimates.
Revenue was up 8 per cent from last year at $9.15bn.
FedEx is viewed as an economic bellwether because of its extensive transport and delivery network throughout the US, with companies and individuals tending to send fewer packages as conditions worsen.
"We're looking forward to a pick-up, even if it's a slight pick-up, in the fall," said David Bronczek, head of FedEx's express division, its largest.
FedEx results were hit by a drop in US revenues and volumes in express delivery, as the cost of fuel rose and customers moving to cheaper services offset price increases.
The company said it did not expect any improvement in express volumes this year.
Operating income grew 30 per cent in ground transport, as customers shifted from more costly express delivery, where operating income grew 6 per cent.
In freight transport, operating income was down 12 per cent.
The domestic transport and freight industry is struggling in the US.
"The environment is worse than what it was at the low point of the last recession in 2001," said Rick Paterson, UBS analyst. "We are essentially in a domestic freight recession."
FedEx expects earnings in the next quarter to be $1.45 to $1.60 per share, and earnings for this financial year to be $7 to $7.40 per share assuming the US economy improves and oil prices do not rise.
Investors were heartened by FedEx's optimistic economic outlook and earnings prediction, which covered the consensus forecast of $7.33.
"Many people thought they might reduce their guidance more than they did," said James Corridore, an analyst at Standard & Poor's. Shares in FedEx had risen 1.61 per cent to $109.80 by the close.
Earnings growth is expected to miss the company's long-term 10 per cent to 15 per cent earnings growth target because of soft economic growth and the cost investments, the company said. Net income for the year was $2.02bn, up 12 per cent, on a 9 per cent rise in revenue to $35.2bn.
06-21-2007, 11:15 AM
#3
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FedEx Corp. Fourth Quarter Net Income Increases 7 Percent
--------------------------------------------------------------------------------
MEMPHIS, Tenn.--(BUSINESS WIRE)--FedEx Corporation (NYSE: FDX) today reported earnings of $1.96 per diluted share for the fourth quarter ended May 31, compared to $1.82 per diluted share a year ago. The quarter’s results include a gain from a settlement with Airbus related to the A380 order cancellation, which had a net benefit to earnings of approximately $0.06 per diluted share.
“FedEx delivered solid financial results in fiscal 2007 even though we were restrained by a slowing U.S. economy,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “The weakened industrial sector is currently limiting demand for transportation services, but we expect the U.S. economy to begin to show modest year-over-year improvement in the late summer to early fall timeframe. We remain optimistic about prospects for global economic growth, and will continue to invest in projects critical to achieving strong long-term financial performance.”
Fourth Quarter Results
FedEx Corp. reported the following consolidated results for the fourth quarter:
Revenue of $9.15 billion, up 8% from $8.49 billion the previous year
Operating income of $1.01 billion, up 9% from $927 million a year ago
Operating margin of 11.1%, up from 10.9% the previous year
Net income of $610 million, up 7% from last year’s $568 million
Total combined average daily package volume at FedEx Express and FedEx Ground grew approximately 4% year over year for the quarter, led by continued growth in ground and international express shipments. Shipment volumes and revenues at FedEx Express, FedEx Ground and FedEx Freight were lower than anticipated in the fourth quarter due to the softer economy.
Full Year Results
FedEx Corp. reported the following consolidated results for the full year:
Revenue of $35.2 billion, up 9% from $32.3 billion the previous year
Operating income of $3.28 billion, up 9% from $3.01 billion a year ago
Operating margin of 9.3%, unchanged from 9.3% the previous year
Net income of $2.02 billion, up 12% from last year’s $1.81 billion
Earnings per share of $6.48, up 11% from $5.83 per share a year ago
Revenue grew due to strong FedEx Ground volume growth, as well as continued FedEx Express International Priority revenue growth. Revenue growth also reflected the acquisition of Watkins Motor Lines in September 2006. Fiscal 2007 results included costs associated with upfront compensation and benefits under the new pilot labor contract at FedEx Express, which reduced second quarter earnings by approximately $0.25 per diluted share. Fiscal 2006 results included a charge of $0.15 per diluted share to adjust the accounting for certain facility leases, primarily at FedEx Express. Capital spending for fiscal 2007 was $2.9 billion.
notice the paraphrasing from the first post...
--------------------------------------------------------------------------------
MEMPHIS, Tenn.--(BUSINESS WIRE)--FedEx Corporation (NYSE: FDX) today reported earnings of $1.96 per diluted share for the fourth quarter ended May 31, compared to $1.82 per diluted share a year ago. The quarter’s results include a gain from a settlement with Airbus related to the A380 order cancellation, which had a net benefit to earnings of approximately $0.06 per diluted share.
“FedEx delivered solid financial results in fiscal 2007 even though we were restrained by a slowing U.S. economy,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “The weakened industrial sector is currently limiting demand for transportation services, but we expect the U.S. economy to begin to show modest year-over-year improvement in the late summer to early fall timeframe. We remain optimistic about prospects for global economic growth, and will continue to invest in projects critical to achieving strong long-term financial performance.”
Fourth Quarter Results
FedEx Corp. reported the following consolidated results for the fourth quarter:
Revenue of $9.15 billion, up 8% from $8.49 billion the previous year
Operating income of $1.01 billion, up 9% from $927 million a year ago
Operating margin of 11.1%, up from 10.9% the previous year
Net income of $610 million, up 7% from last year’s $568 million
Total combined average daily package volume at FedEx Express and FedEx Ground grew approximately 4% year over year for the quarter, led by continued growth in ground and international express shipments. Shipment volumes and revenues at FedEx Express, FedEx Ground and FedEx Freight were lower than anticipated in the fourth quarter due to the softer economy.
Full Year Results
FedEx Corp. reported the following consolidated results for the full year:
Revenue of $35.2 billion, up 9% from $32.3 billion the previous year
Operating income of $3.28 billion, up 9% from $3.01 billion a year ago
Operating margin of 9.3%, unchanged from 9.3% the previous year
Net income of $2.02 billion, up 12% from last year’s $1.81 billion
Earnings per share of $6.48, up 11% from $5.83 per share a year ago
Revenue grew due to strong FedEx Ground volume growth, as well as continued FedEx Express International Priority revenue growth. Revenue growth also reflected the acquisition of Watkins Motor Lines in September 2006. Fiscal 2007 results included costs associated with upfront compensation and benefits under the new pilot labor contract at FedEx Express, which reduced second quarter earnings by approximately $0.25 per diluted share. Fiscal 2006 results included a charge of $0.15 per diluted share to adjust the accounting for certain facility leases, primarily at FedEx Express. Capital spending for fiscal 2007 was $2.9 billion.
notice the paraphrasing from the first post...
06-22-2007, 10:49 AM
#5
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Oil spikes in the summer, it will drop slightly in the fall helping the airlines in general. Add in the busy holiday shipping season and I am guessing the stock will bounce back up around $115-120 by the end of the year
06-22-2007, 11:22 AM
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The stock price is going to close around $110 today. If predictions of an improving economy hold true, growth in China continues at a similar or better pace, and the price moves into the $120 range, this might seem like a bargain.
From Associated Press today 6/22/2007:
NEW YORK - A Stifel Nicolaus analyst remained upbeat on FedEx Corp.'s long-term value on Thursday, after the company reported Wednesday that fiscal fourth-quarter earnings rose but missed Wall Street estimates.
Analyst John G. Larkin said he wasn't surprised by the quarterly results, saying that carriers have characterized freight markets as "sluggish" and "spotty."
Still, Larkin remained upbeat on FedEx's long-term value as the company continues to expand abroad. He said the company has more U.S.-to-China flights than any other cargo carrier, and offers next-day domestic express service within China.
"We believe this is one of the biggest growth opportunities for the company, as it reminds us of the developing U.S. domestic express market 30 years ago and the tremendous potential it represents," Larkin wrote in a client note.
FedEx's express segment should benefit from global trade and Asia development, though the "big wildcard" with respect to demand and earnings remains fuel, Larkin said.
Shares of FedEx rose 15 cents to $109.95 in the premarket, following a $109.80 finish in regular trading Wednesday.
From Associated Press today 6/22/2007:
NEW YORK - A Stifel Nicolaus analyst remained upbeat on FedEx Corp.'s long-term value on Thursday, after the company reported Wednesday that fiscal fourth-quarter earnings rose but missed Wall Street estimates.
Analyst John G. Larkin said he wasn't surprised by the quarterly results, saying that carriers have characterized freight markets as "sluggish" and "spotty."
Still, Larkin remained upbeat on FedEx's long-term value as the company continues to expand abroad. He said the company has more U.S.-to-China flights than any other cargo carrier, and offers next-day domestic express service within China.
"We believe this is one of the biggest growth opportunities for the company, as it reminds us of the developing U.S. domestic express market 30 years ago and the tremendous potential it represents," Larkin wrote in a client note.
FedEx's express segment should benefit from global trade and Asia development, though the "big wildcard" with respect to demand and earnings remains fuel, Larkin said.
Shares of FedEx rose 15 cents to $109.95 in the premarket, following a $109.80 finish in regular trading Wednesday.
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