FedEx (FDX) Expects Demands For Its Delivery Services To Remain Strong

FedEx Corporation (NYSE:FDX) was founded in 1971 by Frederick W. Smith with the goal of introducing an overnight package delivery service across the U.S. The company officially commenced its operation in April 1973 with 389 employees, though it remained unprofitable till 1975. By the early 1980s, FedEx became an established player in the express shipping industry. It generated record revenue of $1 billion in the fiscal year 1983, becoming the first company to achieve that milestone within 10 years of its inception. Today, FedEx is a global leader in express distribution, offering its services in over 220 countries and territories.

Like rivals, FedEx also enjoyed healthy growth in 2020 due to a surge in e-commerce following the Covid-19 outbreak. Many retailers had to close their stores during the pandemic. Customers were left with no choice but to shop through online channels, fueling the demand for delivery services. FedEx also capitalized on the trend and its stock’s value climbed nearly 80 percent during the last year.

The growth is also reflected in the company’s recently published third-quarter results. FedEx reported earnings of $892 million, or $3.30 per share for the three months ended February 28, well above $315 million, or $1.20 per share in the comparable quarter of 2020. On an adjusted basis, it earned $3.47 per share, easily beating the consensus forecast of $3.30 per share.

Revenue for the quarter rose 23 percent on a year-over-year basis to $21.5 billion, above analysts’ average estimate of $19.97 billion. The results mainly benefitted strong deliveries during the holiday shopping period.

Commenting on the quarter, CEO Frederick Smith said in a statement, “As reflected in this quarter’s results, continued execution of our strategies is producing strong earnings growth and margin improvement across our company. We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future.”

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Looking forward, FedEx expects adjusted profit in the range of $17.60 per share to $18.20 per share for the full year, above analysts’ average forecast of $17.40 per share.

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