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What to Expect from FedEx's (FDX) Q3 Earnings

Benjamin Rains

Shares of FedEx FDX have tumbled nearly 30% in the last year as investors worry that the company might soon face tougher competition from Amazon AMZN, as the e-commerce giant races to expand its global shipping business. Now, let’s see what to expect from FedEx’s Q3 fiscal 2019 financial results, which are due out Tuesday, with larger global market conditions possibly trending in the wrong direction for the shipping and logistics powerhouse. 

Overview

FedEx just recently announced that Don Colleran will take over as president and CEO of FedEx Express. The news comes as the company tries to revamp its express business amid a slowdown. FedEx announced a voluntary buyout program for some U.S. workers late last year, along with international network capacity reductions at FedEx Express, and other cost-saving measures. “Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term,” FedEx CFO Alan Graf said in a company statement last quarter.

“These trends, coupled with the change in service mix at FedEx Express, are negatively impacting the segment’s financial results. We remain committed to actively managing costs with a heightened focus on increasing efficiency across the organization.”

With that said, the Memphis-based company just recently announced that it will roll out an autonomous delivery device, called the FedEx SameDay Bot. The move is part of a larger push from shipping and transportation companies to figure out how to best perform last-mile deliveries in what might be a driverless vehicle age. FedEx said it is working with AutoZone AZO, Lowe’s LOW, Target TGT, Walgreens WBA, Walmart WMT, and a few others, on a trial basis in order to “assess retailers’ autonomous delivery needs.”

Investors might be happy to see that FedEx is poised to jump into the future of delivery as it fights to compete with United Parcel Service UPS, Amazon, and others. But the SameDay Bot news will have no impact on the company’s upcoming earnings results.

Q3 Outlook & Earnings Trends

Moving on, our current Zacks Consensus Estimate calls for FedEx’s Q3 fiscal 2019 revenue to pop 7% and reach $17.68 billion. Investors should note that this would represent a slowdown from last quarter’s 9% top-line expansion. Meanwhile, the company’s full-year revenue is expected to jump 8.4% to hit $70.92 billion.

At the bottom end of the income statement, FedEx’s adjusted quarterly earnings are projected to plummet 16.67% to touch $3.10 a share. Jumping a bit further ahead, the company is expected to see its fourth-quarter 2019 EPS figure sink nearly 12%

On top of that, FedEx’s Q3 earnings consensus estimate has fallen by nearly 19% from $3.81 a share before the period got underway to its current $3.10. The company has also experienced some negative earnings estimate revision activity recently.

 

 

FedEx is a Zacks Rank #3 (Hold) at the moment that sports an “A” grade for Value and a “B” for Growth in our Style Scores system. FedEx is scheduled to release its third-quarter fiscal 2019 financial results after the closing bell on Tuesday, March 19. So, make sure to come back to Zacks for a full breakdown of FDX’s actual quarterly results.

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