May 25, 2022


Skillful Business Crafters

FedEx Earnings Beat, Delivery Giant Guides Up Amid Strong Demand, Easing Labor Woes Investor’s Business Daily

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FedEx (FDX) reported better-than-expected fiscal second-quarter earnings late Thursday while also guiding higher. FedEx stock popped early Friday.


FedEx Earnings

Estimates: Analysts on average expected FedEx earnings to shrink 11% to $4.28. Q2 revenue was seen growing nearly 9% to $22.414 billion, according to FactSet.

Results: FedEx earnings came in flat at $4.83 a share, despite “labor market challenges” that raised costs by $470 million. Revenue rose 14% to $23.5 billion.

Labor pressures are starting to fade, letting FedEx take advantage of a “very strong demand and pricing environment,” COO Raj Subramaniam said Thursday.

Outlook: FedEx now sees fiscal 2022 adjusted EPS of $20.50-$21.50 after lowering its target range in September to $19.75-$21. Analysts expected FedEx earnings per share of $19.74 before the Q2 earnings report.

FedEx also OK’d a new $5 billion stock buyback program.

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FedEx Stock

FedEx stock rose nearly 5% to 250.32 in Friday stock market trading. Shares are testing the 50-day line. The relative strength line for FDX shows significant lag, a sign of underperformance vs. the S&P 500 index.

UPS stock fell 0.6% to 206.59, reversing lower from modest gains. Shares closed up 1.1% on Thursday. On Wednesday Citi upgraded UPS stock to buy from neutral. The note also lifted the stock’s price target to 250, from 245.

Customer (AMZN), which is also a growing delivery and logistics rival, climbed 0.7%.

In September, FedEx management said they expect labor availability to gradually improve in the second half of fiscal 2022.

Costs to tackle disruptions to labor and supply chains hit FedEx earnings during the first quarter. But FedEx and UPS have been able to pass on to consumers the increased labor and fuel costs.

Both companies also played key roles in delivering Covid-19 vaccines across the U.S. and in other countries. But the Amazon threat continues. The online retail giant has nearly doubled its fulfillment capacity since the pandemic began. It’s on track to be the largest U.S. delivery service by 2022, an Amazon exec told CNBC.


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FedEx Earnings Beat, Delivery Giant Guides Up Amid Strong Demand, Easing Labor Woes