FedEx Corp. (FDX, Financial) will release its third-quarter 2019 financial results after the market closes on March 19.
In the second quarter, the company posted earnings of $4.03 per share, which missed Zacks’ consensus estimate of $4.05. Revenue of $17.82 billion, on the other hand, was ahead of estimates of $17.71 billion due to robust growth across all its transportation divisions.
Earnings and revenue projection
For the third quarter, the company is projected to register earnings per share of $3.17, which reflects 15% growth on a year-over-year basis. Revenue is expected to grow 7% to $17.69 billion.
Factors affecting financials
The company’s quarterly results are likely to be affected by TNT Express integration costs.
The lacklustre European economy will also take a toll on earnings. Like the second quarter, express package volumes are highly likely to be lower owing to weakness in the eurozone.
A slowdown in worldwide trade would restrict the growth of the company’s major revenue driver, which is the express segment. Therefore, Zacks' consensus estimate for the division is $9.4 billion, which is lower than its prior guidance of $9.6 billion.
Ground revenue is estimated to be $5.3 billion, up from $5.14 billion in the second quarter.
The fact Amazon (AMZN, Financial) has entered the shipping business will likely have a negative impact on the courier service. However, the ongoing trade war between the U.S. and China will deal an even bigger blow as FedEx makes nearly 2% of its total revenue from China.
Efforts to boost growth
The company is keen on minimizing its costs. It plans to cut back on its hiring and staffing functions. Additionally, the package delivery giant’s cost-reduction scheme includes contraction in capacity, especially in the international airline network.
Over the past several quarters, the e-commerce segment has contributed immensely to the company’s overall growth. As a result, it is expected to boost FedEx’s top-line growth.
Disclosure: I do not hold any positions in the stocks mentioned.
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