FedEx (FDX) is set to report Q1 (Aug) earnings results today after the close with a call to follow at 5:30pm ET. Last quarter, FDX reported at 4 minutes after the close, so be on your toes.
The CapitalIQ consensus is for EPS to grow 1% yr/yr to $4.92 and revenue to grow 13% yr/yr to $21.89 bln. FDX typically provides full year EPS guidance.
FDX's business is booming thanks to ecommerce. With more people buying online and working remotely this is a recipe for success for the business. That said, Fedex is facing headwinds on the labor front.
This quarter also laps the first full quarter following the start of the pandemic last year when consumers started to sharply increase their online purchases.
This explains the why EPS growth is expected to appear roughly flat. Q2 (Nov) will be also be a tough comp as well on the back of last years purchasing power and holiday season.
As mentioned above, a big problem for FedEx is that the labor market in the US has been quite challenging to say the least. FedEx’s inability to hire, package handlers in particular, has driven wage rates higher and has created inefficiency as Fedex uses overtime to cover open shifts and route volume. FedEx stated in June that this problem has begun to shift back to normal so it’ll be interesting to see how that plays out.
FedEx announced yesterday that Express, Ground, and Freight will all increase shipping rates on January 3. Any input on these increases will be welcomed as investors try to grasp whether it is net positive or an inflationary offset.
TECHS:
FDX has been in a steady decline since late July as it pushed back from roughly $300/share to near $250/share today.
There are some concerns for some investors that UPS is outperforming FDX or taking market share. Investors will want to see FDX perform better this quarter to squash the fear of operational inefficiency.
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