Shares of FedEx Corporation (NYSE: FDX) dropped 3.8% in Thursday’s extended trading session after the American multinational delivery services company posted lower-than-expected earnings in the third quarter of Fiscal 2022 (ended February 28). Meanwhile, revenue surpassed analysts’ expectations.
Results in Detail
FedEx reported Q3 adjusted earnings of $4.59 per share, missing the Street’s estimate of $4.64 per share. The company recorded adjusted earnings of $3.47 per share in the same quarter last year.
Revenue jumped 9.8% year-over-year to $23.6 billion and surpassed analysts’ expectations of $23.44 billion.
Adjusted operating income stood at $1.46 billion in the quarter, up 37.7% from the prior-year quarter. Higher revenue per shipment and a net fuel gain at all transportation segments, along with reduced variable compensation costs and less severe winter weather, contributed to the results.
Meanwhile, the negative impact from the Omicron variant, along with elevated transportation costs and wage rates had a significant effect on the results. Notably, Omicron contributed to volume softness of about $350 million during the quarter.
At FedEx Ground, operating costs remained high due to the competitive labor environment, which resulted in higher labor rates. This, in turn, increased total costs by about $210 million in the third quarter.
Meanwhile, FedEx Freight’s third-quarter operating income nearly tripled on a year-over-year basis.
COO Comments
FedEx’s COO Raj Subramaniam commented, “Our strategic investments are fundamentally changing the way we perform and execute in e-commerce, demonstrated by our strong performance during the peak month of December. We are committed to delivering for our customers, and remain focused on our strategic initiatives to increase productivity, lower our cost to serve and create shareholder value.”
Guidance
For Fiscal 2022, the company expects adjusted EPS in the range of $20.50 to $21.50, versus the consensus estimate of $20.61 per share. Additionally, capital expenditures are likely to be $7 billion, lower than the prior forecast of $7.2 billion.
Wall Street’s Take
Consensus among analysts is a Strong Buy based on eight Buys and one Hold. The average FedEx price target of $310.56 implies 36.22% upside potential from current levels. However, shares have lost 12.5% over the past year.
Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR) offers insight into FedEx’s performance in the third quarter.
According to the tool, website traffic declined in the third quarter. In Q3 2022, total estimated visits on fedex.com showed a decreasing trend globally, declining 1.04% from the second quarter.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
Related News:
Lennar Posts Strong Quarterly Results as Housing Market Outperforms
FDA Clears Investigational NDA for Sonnet’s SON-1010; Shares Skyrocket
Starbucks’ CEO Steps Down; Shares Gain Over 5%
