FedEx Q2 Earnings Surpass Estimates, Revenues Lag, View Revised

FedEx Corporation FDX reported mixed second-quarter fiscal 2025 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same.Quarterly earnings (excluding $1.02 from non-recurring items) of $4.05 per share beat the Zacks Consensus Estimate of $3.90 and improved 1.5% year over year. Revenues of $21.9 billion fell short of the Zacks Consensus Estimate of $22 billion and fell 0.8% from the year-ago fiscal quarter’s reported figure.Quarterly results were unfavorably affected by the lower-than-expected FedEx Freight revenue and profit, as sustained weakness in U.S. industrial production continued to weigh on less-than-truckload industry demand. The lower FedEx Freight results were offset by cost reduction benefits at Federal Express from DRIVE program initiatives and higher base yields at each transportation segment.Operating income, on a reported basis, decreased 18% to $1.05 billion from the year-ago fiscal quarter’s reported number. Operating margin fell to 4.8% from 5.8% in the year-ago reported quarter.Operating expenses (reported basis) increased marginally by 0.1% to $20.9 billion.FedEx Corporation Price, Consensus and EPS Surprise FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation QuoteFDX board of directors has concluded a comprehensive assessment of the role of FedEx Freight as part of its portfolio and is forging ahead toward full separation through the capital markets, creating a new publicly traded company. The separation is anticipated to be completed within the next 18 months.FDX’s Segmental Performance During the QuarterFederal Express and FedEx Freight now represent the company's major service lines and constitute its reportable segments. Further, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment.FedEx Express segment’s revenues fell 0.3% year over year to $18.8 billion. Federal Express segment was weighed down by higher wage and purchased transportation rates, the expiration of the U.S. Postal Service contract for transportation services on Sept. 29, 2024, and U.S. domestic package demand weakness. These were partially offset by cost reduction benefits from DRIVE, higher base yield and increased international export volume. Our estimates reflect a year-over-year decline of 0.2%.FedEx Freight revenues fell 11% from the year-ago fiscal quarter’s reported figure to $2.2 billion. FedEx Freight segment was hurt by fewer shipments, lower fuel surcharges and reduced weight per shipment, partially offset by higher base yield. Our estimates reflect a year-over-year decline of 5.6%.Average daily shipments fell 8% year over year. Capital expenditures for the reported quarter came in at $818 million.LiquidityFedEx exited second-quarter fiscal 2025 with cash and cash equivalents of $5.02 billion compared with $5.94 billion at the end of prior quarter. Long-term debt (less current portion) was $19.4 billion compared with $19.6 billion at the end of prior quarter.During the reported quarter, FDX completed $1 billion in share repurchases via open market and accelerated share repurchase transactions. Almost 3.7 million shares were delivered from the transactions, with the decrease in outstanding shares aiding fiscal second-quarter results by 7 cents per share.Fiscal 2025 Outlook for FDXFDX now expects revenues to be flat year over year compared with the prior view of low single-digit percentage growth. Earnings per share (EPS) are now expected to be in the range of $16.45 to $17.45 (prior view: $17.90 to $18.90) before the MTM retirement plans accounting adjustments and $19.00 to $20.00 (prior view: $20.00 to $21.00) after also excluding costs related to business optimization initiativesThe effective tax rate is now estimated to be 24% (prior view: 24.5%).FDX still anticipates capital spending of $5.2 billion in fiscal 2025.For fiscal 2025, FedEx anticipates to repurchase an additional $500 million of common stock. As of Nov 30, 2024, $3.1 billion was available for repurchases under the company's 2024 stock repurchase authorization.Zacks RankFedEx currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performances of Other Transportation CompaniesDelta Air Lines (DAL) reported third-quarter 2024 earnings (excluding 47 cents from non-recurring items) of $1.50 per share, which fell short of the Zacks Consensus Estimate of $1.56. Earnings decreased 26.11% on a year-over-year basis, mainly due to high labor costs.Revenues of $15.68 billion surpassed the Zacks Consensus Estimate of $15.37 billion and increased 1.2% on a year-over-year basis, driven by strong air travel demand.J.B. Hunt Transport Services, Inc.’s (JBHT) third-quarter 2024 earnings of $1.49 per share outpaced the Zacks Consensus Estimate of $1.42 but declined 17.2% year over year.Total operating revenues of $3.07 billion surpassed the Zacks Consensus Estimate of $3.04 billion but fell 3% year over year. The downfall was owing to a 5% and 6% decrease in gross revenue per load in Intermodal (JBI) and Truckload, respectively, a decline in load volume of 10% and 6% in Integrated Capacity Solutions (ICS) and Dedicated Contract Services, respectively, and 6% fewer stops in Final Mile Services. These were partially offset by JBI load growth of 5%, which included growth in both the transcontinental and eastern networks and a 3% increase in revenue per load in ICS. Total operating revenue, excluding fuel surcharge revenue, decreased less than 1% from the year-ago reported quarter.United Airlines Holdings, Inc. UAL reported third-quarter 2024 EPS (excluding 43 cents from non-recurring items) of $3.33, which surpassed the Zacks Consensus Estimate of $3.10. Earnings decreased 8.8% on a year-over-year basis.Operating revenues of $14.84 billion beat the Zacks Consensus Estimate of $14.76 billion. The top line increased 2.5% year over year due to upbeat air travel demand. This was driven by a 1.6% rise in passenger revenues (which accounted for 91.3% of the top line) to $13.56 billion. Almost 45,559 passengers traveled on UAL flights in the third quarter, up 2.7% year over year.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Delta Air Lines, Inc. (DAL): Free Stock Analysis Report United Airlines Holdings Inc (UAL): Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks