FedEx (FDX) Likely to Surpass Earnings Estimates in Q3 - Analyst Blog
We expect FedEx Corporation FDX – a leading player in the field of global express delivery services – to beat expectations when it reports third-quarter fiscal 2015 results on Mar 18, 2015, before the opening bell.
Why a Likely Positive Surprise?
Our proven model shows that FedEx is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +213%. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: FedEx has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of FedEx’s Zacks Rank #2 and +2.13% ESP makes us confident of an earnings beat in the third quarter of fiscal 2015.
What is Driving the Better-than-Expected Earnings?
We expect FedEx to turn around from the weak performance delivered in the last reported quarter. All segments of the company are expected to perform well. FedEx’s efforts to control costs also boost confidence. We believe cost optimization should drive bottom-line growth.
We are also encouraged by the company’s focus on share buybacks to enhance investor value. The company expects rising e-commerce spending to generate strong business in ground shipments. Moreover, gradual signs of improvement in the economy should also boost FedEx’s quarterly performance. The company is presently concentrating on network realignment to match the current demand level, and ramping up its performance to gain competitive edge over the likes of United Parcel Service, Inc. UPS. However, foreign exchange movements are anticipated to adversely impact results.
Other Stocks to Consider
FedEx is not the only firm looking up this earnings season. We also see likely earnings beats coming from these companies in the broader transportation sector:
JB Hunt Transport Services Inc. JBHT, with an earnings ESP of +2.82% and a Zacks Rank #3 (Hold).
Knight Transportation Inc. KNX, with an earnings ESP of +3.23% and a Zacks Rank #2 (Buy).
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