FedEx Corp. | $FDX Stock | Shares Drop as Employee Compensation Knocks Q1 Earnings


FedEx Corp. (NYSE: FDX)


FedEx stock fell as much as 4% despite notching a profitable first-quarter and releasing full-year upbeat outlook, as higher labor costs and other expenses affected the results. The company used about $200 million to increase employees’ pay between April and October this year, after the Tax Cuts and Jobs Act of 2017.

FedEx and other US package delivery companies are expecting to generate huge revenues during the upcoming holiday season. FDX stock closed the normal hours of trading with a gain of 0.1% to trade at $255.73. It has rallied nearly 2.5% since the beginning of the year.

FDX Earnings & Outlook

FDX reported first-quarter net income of $835 million, or $3.10 per share, up from $596 million, or $2.19 per share, for the same period last year.

Earnings, adjusted for amortization costs and special items, were $933 million, or $3.46 per share, an improvement from $683 million, or $2.51 per share, in the year-ago. Analysts on average were expecting adjusted earnings of $3.81 per share.

In the three months to August 31, the company’s revenue reached $17.1 billion, up 12% from the prior-year quarter and above analysts polled by Thomson Reuters’ estimates of $16.9 billion. For the full year, FDX expects its adjusted earnings to be in the range of $15.85 to $16.45 per share, up from its previous expectation of between $15.65 and $16.25 per share. 

FedEx Corp. CEO Comments

FedEx Corp. chairman and chief executive officer Frederick W. Smith had this to say on the earnings,

“FedEx delivered higher first-quarter earnings driven by solid execution of our business plan and a strong U.S. economy. We are very optimistic about our prospects for profitable growth and remain confident we will reach our goal to improve FedEx Express operating income by $1.2 billion to $1.5 billion in fiscal 2020 versus fiscal 2017.”

FedEx Corp. Company Profile

FedEx Corp. engages in the provision of a portfolio of transportation, e-commerce, and business services. It operates through the following segments: FedEx Express, TNT Express, FedEx Ground, FedEx Freight, FedEx Services, and Other.

The FedEx Express segment consists of domestic and international shipping services for delivery of packages, and freight. The TNT Express segment comprises of international express transportation, small-packaging ground delivery, and freight transportation.

The FedEx Ground segment focuses on small-package ground delivery services, and day-certain service to any business address in the United States, and Canada. The FedEx Freight segment offers less-than-truckload freight services across all lengths of haul.

The company competes with DHL, ArcBest Corporation, United Parcel Service, Inc., GeoPost, United States Postal Service, XPO Logistics, Inc., General Logistics Systems, YRC Worldwide Inc., General Logistics Systems, and Old Dominion Freight Line, Inc.

The FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services, and certain back-office functions. The company was founded by Frederick Wallace Smith on June 18, 1971 and is headquartered in Memphis, TN. –CNN Money