The U.S. global delivery service FedEx (FDX, Financial) reported third-quarter earnings and revenue on Tuesday that surpassed estimates. Earnings per share for the quarter came in at $3.72 versus. $3.11 projected. Furthermore, quarterly revenue was $16.52 billion, which was above the expectation of $16.16 billion. Besides beating estimates, the company’s earnings and revenue were higher on a year-over-year basis. The company’s net income was $2.07 billion or $7.59 a share, up from $562 million or $2.07 a share reported a year ago.
Bird’s-eye view
Post the tax reform, the delivery giant said that it would put in $1.5 billion to develop and expand its Indianapolis shipping hub. In addition to this, the company would invest $1 billion for the expansion of its Memphis, Tennessee, hub. In the press release, FedEx’s Chairman and CEO, Frederick W. Smith said:
“Execution of our long-term growth strategies, customer demand for the unique value of our broad portfolio of solutions and healthy growth in the global economy are driving our performance,” He further said: “We expect strong operating performance in each of our transportation segments in the fourth quarter.”
Apparently, FedEx has come under some pressure, thanks to the online behemoth Amazon (AMZN, Financial) who is looking forward to launch its own packing delivery service, which is called Shipping with Amazon. In response to this, FedEx said that it would open 500 FedEx office stores inside Wal-Mart’s (WMT, Financial) physical stores. However, when that would happen and whether that would have any favorable impact is yet to be known.
Guidance
Based on an impressive performance, foreign tax benefits and change in the U.S. tax laws, the company gave robust full-year guidance. FedEx’s FFO Alan Graf commented in a statement:
“We are increasing our fiscal 2018 earnings outlook due to foreign tax benefits from our international corporate structure, the benefits from U.S. tax reform and improved operating performance,”
The company says that it expects earnings per share to range between $17.90 and $18.30 a share for the whole year before making pension-accounting adjustments. As a matter of fact, the company projects capital expenditure of $5.8 billion. Moreover, consolidated operating income is estimated to be in the range of $1.84 billion to $1.94 billion while operating margin is forecasted to be between 10.4% and 11.1%.
Disclosure: I do not hold any position in the stocks mentioned in this article.
