FedEx Corp (NYSE: FDX) is gaining sharply in extended hours on Tuesday after coming in ahead of Street estimates for its fourth financial quarter.
Shares of the package delivery company are now trading at a year-to-date high.
FedEx stock rallies on impressive guidance
FedEx stock is in the green in after-hours also because its management issued upbeat guidance for the future. The multinational now forecasts its per-share earnings to fall between $20 and $22.
Analysts, in comparison, were at $20.85. Raj Subramaniam – the chief executive of FedEx said in a press release today:
Q4 results reflect continued execution of our DRIVE initiatives and our resolve to transform FedEx. We expect this momentum to continue in fiscal 2025 as we advance our efforts to create the world’s most flexible, efficient, and intelligent network.
The Memphis-headquartered firm returned a total of $3.8 billion to shareholders via stock buybacks and dividend payments in fiscal 2024. FedEx stock is still downs lightly versus its all-time high in 2021.
FedEx Q4 earnings snapshot
- Earned $1.47 billion versus the year-ago $1.54 billion
- Per-share earnings also declined from $6.05 to $5.94
- Adjusted EPS printed at $5.41 as per the earnings report
- Revenue inched u 1.0% year-on-year to $22.1 billion
- Consensus was $5.37 a share on $22.06 billion revenue
FedEx improved its adjusted operating margin in the fourth quarter by 40 basis points to 8.4%. John Dietrich – the chief financial officer of FDX said today:
As we advance our transformation, we continue to focus on reducing structural costs and lowering the capital intensity of the business.
This is a developing story. Check back in a few minutes for more updates
Is there upside left in FedEx shares?
FedEx recently announced plans of lowering its headcount by as much as 2,000 in Europe. The New York listed firm expects that move to deliver up to $175 million in annual savings from fiscal 2027.
Ahead of the earnings report on Tuesday, analysts at Raymond James reiterated their “outperform” rating on FedEx shares but lowered their price target to $300. That, nonetheless, suggests about a 15% upside from here. Their research note reads:
Execution of DRIVE initiatives is a key focal point of investors, given that ~$2.2B in annualized cost saves are anticipated for FY25 via further European restructuring, G&A cuts, and procurement saves from the redesign of their air network. Story at FedEx hinges on the execution of these idiosyncratic cost initiatives, particularly as the freight/parcel market remains soft.
Still, the corporate insider sentiment on FDX shares is currently negative, as per Business Insider.
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