Last Thursday night, September 19, ’24, FedEx (NYSE: FDX) released their fiscal Q1 ’25 earnings report, and the results were not as rosy as investors had hoped. Let’s dive into the numbers and see what this means for the company and its shareholders.
Key Metrics Comparison:
- FedEx Revenue: $21.58 billion vs. $21.97 billion estimate (Missed by 2%)
- FDX Operating Income: $1.2 billion vs. $1.67 billion estimate (Missed by 28%)
- FDX EPS: $4.82 estimate vs. $3.50 actual (Missed by 25%)
- Express Margin: Dropped to 5.4% from the 7.3% estimate
Revenue Growth Concerns:
- Revenue growth has been stagnant for the past 6 quarters, which is a significant issue that needs to be addressed moving forward.
Positive Points to Consider:
- Tough comparison with fiscal Q1 ’24, where the operating margin was 7.2%
- First fiscal quarter (August end) is traditionally the weakest for FedEx
- $2.2 billion of the targeted $4 billion expense savings is still untapped
Free Cash Flow and Future Outlook:
- Trailing 12-month numbers have dipped, but free cash flow still shows a 4% yield at current prices
- Analysts have revised down revenue growth expectations for fiscal ’25 from 3% to 1%
Conclusion:
The recent FedEx results have raised questions about whether the issues were economically or operationally driven. The stock saw a bounce after a significant drop, but challenges remain as the company navigates a potentially slowing economy and changing market dynamics.
The next earnings report in fiscal Q2 ’25 is eagerly awaited to see if the company can turn things around. Investors should be cautious and monitor the situation closely, as past performance is not indicative of future results.
Thank you for reading this analysis of FedEx’s recent performance. Stay tuned for more updates on the financial markets and investment opportunities.