FedEx to Report Fiscal Q2 Earnings

FedEx, the Memphis-based shipping giant, is scheduled to announce its fiscal second-quarter earnings on Tuesday. Here are the key details you should know.

Net Income

Analysts anticipate that FedEx will report a profit of $976.6 million for the quarter ended Nov. 30. This is a significant increase from the $788 million profit reported in the same period last year.

Revenue

The company's revenue is expected to decline to $22.36 billion compared to $22.8 billion last year.

Adjusted Earnings

Excluding certain one-time items, FedEx is projected to achieve a profit of $4.19 per share.

Stock Performance

During the quarter, FedEx experienced a 0.8% decrease in its stock price. It is currently trading at $283.50 per share.

Key Focus Areas

Shipping Demand and Market Share

FedEx has faced challenges in shipping demand, but there have been recent positive developments. The bankruptcy of competitor Yellow contributed to FedEx's financial success last quarter, and the company gained some additional business during negotiations between United Parcel Service and the Teamsters. This quarter's results will provide insight into whether FedEx has maintained its recent market share gains.

Holiday Season Expectations

Both FedEx and rival UPS have offered discounts to customers in anticipation of weaker shipping demand during the holiday season. This is unusual as prices typically increase during this period. Investors will closely analyze FedEx's commentary on how volumes were affected during the recently completed quarter and the extent to which pricing declined.

Cost-Cutting Measures

The ongoing cost-cutting strategy resulting from the merger of FedEx's Express and Ground units has positively impacted profit in previous quarters. Investors will be interested in any indications that lower expenses can offset weaker shipping demand.

It will be interesting to see how FedEx performs in terms of both financials and market trends when the results are released.

Net Income Projection

The Memphis, Tenn.-based shipping giant is expected to report a profit of $976.6 million in the quarter ended Nov. 30, compared with $788 million a year ago, according to the consensus of eight analysts polled by FactSet.

Revenue Forecast

The company's revenue is seen falling to $22.36 billion from $22.8 billion a year earlier, according to 20 analysts polled by FactSet.

Adjusted Earnings Analysis

Stripping out certain one-time items, FedEx is expected to log a profit of $4.19 a share, according to the consensus of 25 analysts polled by FactSet.

The stock price fell 0.8% during the quarter and recently traded at $283.50 a share.

What to Watch

1. Business Performance: FedEx has endured a stretch of weaker shipping demand, but has gotten a boost in recent months. The decline of bankrupt shipper Yellow contributed some to FedEx's top-line results last quarter, and the company gained some business over the summer due to protracted negotiations between United Parcel Service and the Teamsters. The company will offer a fresh sign of whether it is retaining its recent market share gains.

2. Holiday Season: FedEx and rival UPS have offered discounts to customers during the lead-up to the holidays, a stretch when they usually raise prices. The move is a signal of expectations for weaker shipping demand for the holidays. Investors will look for commentary from FedEx on how much volumes took a hit in the recently-completed quarter, as well as how much pricing fell.

3. Cost Cut Strategy: The company's ramping cost cuts from merging its Express and Ground units are continuing to materialize. FedEx's profit rose last quarter due to the cost cuts, and investors will be on the lookout for signs lower expenses can make up for weaker shipping demand.