FedEx (FDX) 3Q earnings beat estimates, but outlook disappoints
Posted by: in Products and ServicesFiled under: Earnings reports, Forecasts, Bad news, Products and services, Consumer experience, FedEx Corp (FDX)
Shares of package delivery company FedEx Corp. (NYSE: FDX) have been dropping this morning, despite the firm posting better-than-expected third-quarter earnings per share. Hurting the stock this morning is the company’s fourth-quarter guidance, which came in well below analysts’ predictions.
FedEx reported this morning that its profit during the third-quarter slipped 6% to $393 million, or $1.26 a share, hurt by surging crude oil prices and a weak U.S. economy. These numbers are down from $420 million, or $1.35 a share reported in the same period a year ago when the company benefited from a reduction in its effective tax rate. However, the overnight package delivery giant was able to beat analysts’ predictions for quarterly earnings of $1.22 a share.
The company posted a 10% rise in its third-quarter revenue to $9.44 billion, up from $8.59 billion a year earlier. Analysts, on average, expected FedEx show revenue of $9.11 billion in the quarter, according to Thomson Financial.
The company forecast fourth-quarter earnings numbers in a range between $1.60 and $1.80, below analysts’ predictions of $1.95, blaming the current market conditions and high oil prices. Looking ahead, FedEx anticipates fourth-quarter trends to continue into fiscal 2009, resulting “in limited earnings growth next year.”
The company’s current guidance assumes no additional oil price increase and “no further weakening in the economy.”
FedEx had a pretty difficult 2007, as the company had to face continued fears over a possible recession. The surging oil prices and credit crises brought a slowdown in consumer spending for express delivery and trucking. In addition, FedEx’s pessimistic outlook disappointed traders who pushed the stock shares down 1.7% in early trading.
Eliza Popescu is a financial writer for the on the web investment advisory service Investor’s Observer.
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