FDX beat top line analyst expectation of EPS by $.03 and, perhaps more importantly, met the bottom line revenue goal of $11B. They maintained the going forward expectations as well. Given the headwinds of higher fuel and customers diverting to lower yield service levels it's a solid report. Already they are up to $114 in the premarket. I suspect that UPS should reach into the $91's today based on that report.
solid? revenue up 2% over last year and 3 cent beat on lowered estimates....sounds pretty lame to me..not to good for a supposed growth company...but nowadays it doesn't matter to wall street.....gonna have to lower ups guidance a lot lower for ups to beat this quarter...UPS missed huge last quarter and stock above 90...really? irrational exuberance?
One more thing. FDX's primary impetus for the quarter came from performance in their ground operations. We should keep in mind that they have a tremendous cost advantage over UPS in this segment since they operate under the scurrilous independent contractor model that passes a lion's share of operating expenses onto the I.C. While we pay superior wages and benefits to our drivers, FDX treats theirs with disdain while dancing on the lines of illegality.
Just what were you looking for given their previous guidance and the present state of domestic and global economies not to mention higher fuel costs (with delayed surcharge headwinds) and one less operating day in the quarter? If you add 1.5% to revenue for the missing day vs. last year you have about a 3.5% increase and a slightly bigger revenue beat. If you don't think that this was a solid performance given all the obstacles then you're simply being unrealistic. They even managed to improves their profit margin from 6.9% to 7.2% in a service level downgrade environment. I'm really hoping we can perform as well when we report next month. 90 days ago analysts were looking for EPS of $1.24 from UPS and it now sits at $1.15. What might be more difficult for us is meeting the 4% revenue increase that is currently projected. We won't have a lost day in our calculus so that should help. Either way, it's remarkable that as I type, we're sitting at almost $91 even when both FDX and UPS have warned about the sluggish economy. Clearly investors are buying shares today in expectations of a brighter tomorrow. .