FedEx Corporation (FDX)’s Critical Read on the Global Economy

Page 1 of 2

Tomorrow, FedEx Corporation (NYSE:FDX) will release its latest quarterly results. But more than many companies’, FedEx’s results will indicate not just the success or failure of its business but also general levels of business activity throughout the world, shedding light on the key question of whether a global economic recovery can truly take hold given current conditions.

FedEx Corporation (NYSE:FDX)

FedEx Corporation (NYSE:FDX) has gotten used to the challenges of dealing with sluggish economic conditions. With a variety of cost-cutting initiatives, the transportation giant has done a good job of getting the most from the revenue it generates. Let’s take an early look at what’s been happening with FedEx Corporation (NYSE:FDX) over the past quarter and what we’re likely to see in its quarterly report.

Stats on FedEx

Analyst EPS Estimate $1.96
Change From Year-Ago EPS (1.5%)
Revenue Estimate $11.44 billion
Change From Year-Ago Revenue 4%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

What will FedEx’s earnings say about the economy?
Analysts have gotten markedly less enthusiastic in recent months about FedEx Corporation (NYSE:FDX)’s earnings prospects, cutting their May-quarter estimates by a dime per share and reducing their full-year fiscal 2014 estimates by more than $0.45 per share. The stock has responded negatively, falling nearly 10% since mid-March.

FedEx has been going through an extended phase of restructuring lately, with the recognition that the changing global economy requires some consolidation of its business. Between slimming down its air-transport network and offering voluntary employee buyouts to reduce unnecessary staffing, FedEx Corporation (NYSE:FDX) has started to make itself more efficient going forward. Moreover, the greater emphasis on ground transportation puts it in more direct competition with United Parcel Service, Inc. (NYSE:UPS), allowing FedEx to prove its mettle against its chief rival.

Cost-cutting measures remain exceedingly important for FedEx. Earlier this month, the company said it would retire some of its older aircraft and replace them with more fuel-efficient planes. The Boeing Company (NYSE:BA) is keeping its 767 production line in operation solely to serve FedEx’s needs, with its order for 50 aircraft to replace FedEx Corporation (NYSE:FDX)’s existing The Boeing Company (NYSE:BA) 727 planes, as well as MD-10 and Airbus A300 and A310 aircraft. Yet FedEx expects to pass on some of its costs to customers. As of July 1, FedEx will implement a 4.5% rate increase throughout most of North America for its freight division, noting that its freight fuel surcharge remains much lower than that of most of its peers in the business of shipping quantities of goods that don’t make up full truckloads.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!