FedEx Corporation Positive Guidance For Fiscal Year 2016

The package delivery organization is quite optimistic about the future as it reported better than expected earnings for the third quarter of fiscal year 2015.

After reviewing FedEx Corporation’s third quarter financial results on March 21, Argus upgraded the earnings per share (EPS) estimate for company’s fiscal year 2016. From an initial EPS estimate of $10.75, it got excited and upgraded it to $10.83 along with a Buy rating on the stock of the delivery company with a price target of $180.

The courier service organization announced its third quarter fiscal year 2015 earnings on March 16, 2015. In these recent earnings report, the company disclosed revenue earned through sales of $12.654 billion outperforming the analyst’s estimate by 2.37% which suggested the revenue generation to be at $12.361 billion. The net income reported by the company during the quarter was $691 million. It managed to outperform the analyst’s consensus in that respect too by 5.51% since they had estimated the delivery giant to report $654.938 million.

The chairman, president and CEO of the package delivery organization, Frederick W. Smith stated that the company’s financial performance is a reflection of the increase in demand for the business’s broad portfolio due to which we can witness an increase in revenue and adjusted profit of the corporation. He went on by appreciating the efforts of the company’s team members during the peak season who managed to give great service despite of the strong shipping demands which was driven by the growth in e-commerce.

The better-than-expected earnings were reported by the company owed to the impact made by the currency exchange rates along with the decline in fuel prices. Additionally, the company itself worked on better management initiatives. Other factors that contributed to the increase in earnings include the 7.3 million shares repurchase.

As for the guidance for fiscal year 2016, the delivery business decided to increase its adjusted earnings per share to in a range of $10.7 and $10.9 which was initially in the range of $10.4 to $10.9. Furthermore, the forecast for capital expenditure was also increased by almost $0.2 billion to $4.8 billion however it had previously announced capital expenditure on December 16 of $4.6 billion.

In contrast to that the chief financial officer Alan B. Graf. Jr. stated that for fiscal year 2016, the adjusted earnings per share are to be increased by 20% to 22% as the company had started to benefit from its profit improvement program. He added that this positively is to reflect in the upcoming 2017 fiscal year as well since the company is expecting solid growth in its cash flow and earnings.

FedEx Corporation stock is being traded in the market for a share price of $164.63 up by 0.56% with earnings per share of $4.07. Furthermore, the market capitalization of the delivery company is at $44.84 billion.

FedEx Corporation Report Better Than Expected Earnings for 3QFY16

The courier business has managed to beat the estimation of the analysts however it remains quite concerned as it might lose one of its most important customers.

On Wednesday, FedEx Corporation reported its third quarter earnings which easily topped analyst’s estimates..The company managed to beat analyst’s estimates in terms of both revenue as well as earnings per share. It reported earnings of $2.51 per share, however in comparison to the analyst’s calculations which were at $2.37, the company performed fairly well.

On the other hand, three month period revenue that the Street’s analysts expected the courier company to report were $12.38 billion while it reported the revenue to be at $12.7 billion – again outperforming the expectations of the analysts. Net earnings for the third quarter fiscal year 2016 were reported to be $692 million, compared to the analyst’s estimations, a difference of $37.06 million can be seen, as they calculated the net earnings to be at $654.94 million.

The executives at FedEx Corp stated that the retailers in the industry should start to pay more for the shipments to offset the cost of current expansion of the company’s network that it is doing so specifically to meet the growing demands of e-commerce.

During the current year, the Wall Street Journal reports, that the courier organization increased its capital spending by as much as $4.8 billion. This increase in the capital spending is considered to be the largest increase that was incurred in the company’s ground division that also handles the e-commerce business – as per the report by the company, this increase is likely to continue for another two years.

The Financial executive of FedEx, Alan Graf stated that the company can’t just increase its network and spend that kind of capital and not expect to get a return and he believes that the price of shipping an e-commerce package should reflect the effort that took to get the package delivered.

The delivery giant also reported that the net income during the third quarter fell by 19% to 507 million. Before the company had reported the earnings, the stock of the company is the past 12 months had fallen by 19% mainly due to higher spending, uncalled for legal costs along with a rough holiday season, as it received increased competition from one of its competitors Amazon.com.

The chief executive Mr. Fred Smith stated that it is preposterous that a number of people believe that amazon will be able to build up a network even close to that of FedEx and/or UPS Inc. He added that just because the retailer has managed to build a network of warehouses does not mean it will be able to come to a position where these courier giants are.

The Memphis, Tenn. - based courier organization might believe that Amazon will not be able to build a network as strong as that of these courier companies but it does seem to be quite upset with the fact that if it works out for the e-commerce giant, FedEx might be losing one of its most important customers. At this point, Amazon has declined to comment.