FedEx Earnings Preview

FedEx Corp is an American multinational conglomerate holding company which engages in the provision of transportation and delivery services (FedEx Express), small-package ground delivery services (FedEx Ground), freight transportation services to businesses and residences (FedEx Freight), sales, marketing, information technology, communications, customers service and back-office functions as well as other operating segments (FedEx Services). The company is scheduled to report its earnings for fiscal quarter ending Aug 2023 on 20th September (Wednesday), after market close.

Industry Revenue: Global Courier & Delivery Services. Source: IBIS World
Industry Revenue: Global Courier & Delivery Services. Source: IBIS World

In general, global courier & delivery services have undergone a declined CAGR at -5% over the past five years. The industry bagged a handsome annual revenue over $460B (+11.8% (y/y)) in 2021, when e-commerce activity boomed during the height of the pandemic. However, as shipping volume declined later, coupled with rising oil prices and operational costs etc., average profit for these courier and delivery services companies is expected to succumb to its lowest point since 2009.

FedEx: Revenues & Earnings (After Deduction of Tax and Expenses). Source: Tipranks

FedEx sales revenue has declined for four consecutive quarters, to the latest at $21.93B. In the same period last year, the company’s sales revenue hit $24.39B. Despite operating margin at 8.1% which is below that in the previous year (9.2%), it was still regarded as the strongest throughout the fiscal year. The welcoming result is due to the company’s solid expense management as well as its DRIVE transformation which involves efforts in improving the overall efficiency in terms of pick ups, transports, and package deliveries. Headwinds such as cost inflation and demand weakness are partially offset by cost reduction actions and its local package yield improvement.

FedEx: Sales Revenue & EPS versus Analyst Forecast. Source: CNN Business

Consensus estimates for sales revenue of FedEx remain flat at $21.8B, in line with the management outlook. On the contrary, EPS is expected to hit $3.70, down over -25% from previous quarter. In the same period last year, its EPS was $3.44.

Technical Analysis:

The #FedEx share price recovered over 60% of the losses between May 2021 to September 2022, since gaining ground above 141 (a new low since late June 2020). Recent price movement has retraced towards support $251.50, leaving a session high at $270.22. If the asset breaks below the said support, the next level to focus on is $239.90, followed by $230.50. On the other hand, a bullish move above $270.22 would indicate continuation of the bullish trend, with $281.40 and the psychological level $300 in focus.

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Larince Zhang

Market Analyst

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