Earnings Preview: FedEx

AP News
Posted: Dec 16, 2009 4:19 PM

FedEx reports earnings for its fiscal second quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: What FedEx Corp. sees, the economy will soon feel. That's the stance of analysts that use financial results from the package delivery company and its larger rival, UPS Corp., to gauge how consumer spending and other metrics are holding up.

FedEx is expected to report growth in international priority and ground shipments in the quarter ended Nov. 30, but shipping is still weak compared with last year.

The company, based in Memphis, Tenn., said year-over-year growth in U.S. overnight express and international priority services increased each month during the quarter, helped by inventory restocking. FedEx said demand for international services improved particularly in Asia and Latin America.

BY THE NUMBERS: The package delivery company said earlier this month it expects to report a profit of $1.10 per share, down 30 percent from a year ago. That was raised from an earlier forecast of between 65 cents and 95 cents per share. Analysts polled by Thomson Reuters currently predict earnings of $1.05 per share, on average.

ANALYST TAKE: Justin Yagerman, an analyst with Deutsche Bank, said he expects the company to continue to report strength through the busy holiday season. Although the third quarter is typically slow because two-thirds of the fiscal period is post-Christmas, Yagerman expects FedEx to continue to improve through the end of its fiscal year as they take a bigger slice of the market, further cut costs and see volumes rebound.

STOCK PERFORMANCE: The stock gained 23 percent in the fiscal second quarter. Shares have surged 42 percent so far this year.