FedEx Corp. (NYSE: FDX) announced erratic first-quarter fiscal 2024 statistics. Although the earnings were much above expectations, the revenue fell short of Wall Street forecasts. The logistics company has lowered its earnings forecast and tightened its revenue forecast for FY 2024. The stock decreased $0.76 or 0.29% from the previous close to close Friday’s trading at 261.09.
Revenues for the first quarter were $21.70 billion, down 6.50% from $23.24 billion in the corresponding quarter of fiscal 2023, according to the Memphis, Tennessee-based corporation.
FedEx reported net income of $1.08 billion, or $4.23 per share, for the most recent quarter that concluded on August 31, 2023, an increase of 23% from $875 million, or $3.33 per share, on August 31, 2022. Along with attempts for cost containment, the FedEx Express segment was the driving force behind the expansion.
Excluding business optimization and realignment costs, FedEx recorded a 1Q 2024 non-GAAP net income of $1.16 billion, or $4.55 per share, compared with $905 million, or $3.44 per share, in 1Q 2023.
FedEx was expected to report 1Q 2024 non-GAAP earnings of $3.73 per share on revenues of $21.81 billion, according to analysts surveyed by Refinitiv.
Segment wise:
- FedEx Express revenues fell by 9% y-o-y to $10.09 billion.
- FedEx Ground revenues were $8.42 billion, up 3% from last year.
- FedEx Freight revenues declined 16% y-o-y to $2.29 billion.
- FedEx Services revenues remained almost flat at $72 million.
Commenting on the quarterly results, Raj Subramaniam, FedEx Corp. president and CEO, stated “We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results.”
Adjusted operating margin rose to 7.30% in Q1 2024 from 5.30% in Q1 2023. During the first quarter, FedEx repurchased 1.95 million shares worth $500 million. The company expects to repurchase $1.50 billion worth of shares in FY24. At the end of the first quarter, FedEx had cash and cash equivalents of $7.10 billion.
Looking forward, the company now projects FY 2024 revenues to be flat on a year-over-y basis, compared with its earlier outlook of flat-to-low-single-digit-percent growth.
Similarly, FedEx now forecasts FY 2024 non-GAAP earnings of between $17 and $18.50 per share, compared with earlier guidance in the range of $16.50 to $18.50 per share. Wall Street analysts anticipate the company to report FY 2024 non-GAAP earnings of $17.50 per share.
The mixed results and tightening of the FY 2024 outlook are expected to keep the stock of FedEx range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the stock of FedEx is rising after consolidating at $250 levels. The next resistance is anticipated to be near $270. Additionally, the stock is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate FedEx to remain in an uptrend in the short term.
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