FedEx Leads S&P 500 After Surprise Earnings Growth Shocks Wall Street (2024)

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FedEx Leads S&P 500 After Surprise Earnings Growth Shocks Wall Street? ›

FedEx Leads S&P 500 After Surprise Earnings Growth Shocks Wall Street. Shipping heavyweight FedEx (FDX) surprised Wall Street Thursday, reporting better-than-expected fiscal 2024 third-quarter earnings while revenue came in below expectations.

FedEx's odds of distress is under 8% at this time. It has tiny probability of undergoing some form of financial crisis in the near future. Probability of bankruptcy shows the probability of financial torment over the next two years of operations under current economic and market conditions.

Looking at cash flow, FedEx is expected to report cash flow growth of 9.7% this year; FDX has generated cash flow growth of 3.6% over the past three to five years. FDX should be on investors' short lists because of its impressive growth fundamentals, a good Zacks Rank, and strong Growth and VGM Style Scores.

A decline for FedEx Express — which handles air and ground shipments globally — was due to lower international yields, which were offset in part by cost reductions and higher domestic package yields, the company said.

FedEx is forecast to grow earnings and revenue by 9.3% and 4.1% per annum respectively. EPS is expected to grow by 12.6% per annum. Return on equity is forecast to be 18% in 3 years.

FedEx will consolidate all its operating companies into a single organization, effective June 2024. FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services.

The average price target for FedEx is $322.38. This is based on 17 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $359.00 ,the lowest forecast is $215.00. The average price target represents 13.14% Increase from the current price of $284.95.

In terms of forward price-to-earnings (P/E) ratio, UPS stands at 15.31, slightly higher than FedEx's 13.24. This metric suggests that investors may be paying a premium for UPS's earnings compared to FedEx. According to analysts, UPS holds a potential upside of 7.18%, while FedEx boasts an even higher upside of 11.2%.

FedEx is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is $433.21, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low.

Why did Amazon ditch FedEx? ›

FedEx says one of the key factors in deciding not to renew its contract with Amazon was because it wanted to focus on the larger e-commerce market. The number of e-commerce packages is expected to grow from 50 million to 100 million a day by 2026.

Capital spending for fiscal 2024 was $5.2 billion, down 16% from $6.2 billion in fiscal 2023. During fiscal 2024, FedEx returned approximately $3.8 billion to stockholders through the combination of $2.5 billion of stock repurchases and $1.3 billion of dividend payments.

The package delivery giant missed earnings and revenue estimates on a drop in volume, lower fuel surcharges, reduced demand surcharges, and a shift toward less profitable services. FedEx cut its full-year revenue outlook for the second consecutive quarter, and now anticipates a decline.

FDX is a Zacks Rank #3 (Hold) stock, with a Growth Style Score of B and VGM Score of A. Earnings are expected to grow 15.3% year-over-year for the current fiscal year, with sales growth of 3%. Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025.

FedEx has the Financial Strength Rank of 6.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is.

FedEx Corp. reported growing profits despite declining revenue in its first quarter of fiscal 2024 ended Aug. 31. FedEx revenue declined to $21.7 billion, down from $23.2 billion in the year-ago period. However, operating income grew over the same time period, up to $1.49 billion from $1.19 billion last year.

Two major problems have emerged: the handoff of packages from sorting facilities to FedEx contractors and the high turnover rate among contractor drivers.

FedEx Corp. is announcing today at its DRIVE Investor Event that it will consolidate its operating companies into one organization, creating efficiencies that will enhance the company's ability to meet the evolving needs of customers and ultimately build a stronger, more profitable enterprise.

The Memphis, Tennessee-based company said it is cutting jobs and consolidating some teams to streamline its workforce and reduce structural costs. FedEx anticipates it will lay off 1,700 to 2,000 employees, reportedly costing the company between $250 million and $375 million through the 2026 fiscal year.