Bolstered by strong holiday shipping, FedEx Corp. FDX reported better-than-expected third-quarter 2021 results after the closing bell on Thursday.
The Memphis, Tennessee-based logistics company posted adjusted earnings of $3.47 per share for the three months ended Feb. 28, topping Refinitiv's estimates of $3.23. While net income of $939 million was up substantially from $371 million a year ago, FedEx's operating income took a $350 million hit as a result of severe winter weather in February impacting operations at several of its major hubs.
Revenue grew 23% from the prior-year quarter to $21.51 billion on the back of robust volume growth in its domestic residential package delivery business and international shipping services. Analysts were anticipating $19.97 billion in sales.
In a statement, Chairman and CEO Frederick Smith said he expects "demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future."
Executive Vice President and Chief Financial Officer Michael Lenz also commented on the company's "significant improvement" that "highlights the momentum in our business which continued through an unprecedented peak season."
"Our growth in fiscal 2021 has identified opportunities for investments that further position us for sustained long-term growth in earnings and cash flows as we move into fiscal 2022 and beyond," he added.
Looking ahead to full fiscal 2021, FedEx is forecasting earnings per share between $17.60 and $18.20. The effective tax rate is projected to be 21% to 22%, while the capital spending guidance is $5.7 billion.
Along with rival United Parcel Service Inc. UPS, the company has also become a major player in distributing Covid-19 vaccines. It began shipping the vaccine from Johnson & Johnson JNJ earlier this month, which FedEx said should lead to a "significant uptick" in volume.
"I'm exceedingly proud of our FedEx team members, who are moving the world forward through the delivery of Covid-19 vaccines — the most important work in the history of FedEx," Smith said.
After gaining 3% in after-hours trading on Thursday, FedEx shares continued their rally on Friday morning. With a $74.25 billion market cap, the stock was up 6.32% at $280.17. GuruFocus estimates shares have climbed 150% over the past year.
Disclosure: No positions.
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