FedEx Q4 sales, earnings top estimates as e-commerce, business spending ramps

·Reporter
·3-min read

FedEx (FDX) reported fiscal fourth-quarter sales and profits that exceeded estimates, with the shipping company's results boosted by persistent strength in e-commerce and a pick-up in business and international shipping. 

However, shares fell more than 3% in late trading, with the print failing to impress some on Wall Street hoping for a stronger beat. 

Here are the main metrics from FedEx's report, compared to consensus estimates compiled by Bloomberg:

  • Revenue: $22.6 billion vs. $21.49 billion expected and $17.36 billion Y/Y 

  • Adjusted earnings per share: $5.01 vs. $5.00 expected and $2.53 Y/Y 

The Memphis, Tennessee-based company grew sales by 30% over last year, or at the fastest rate since at least 2010, based on Bloomberg data spanning back more than a decade. Results for the three months ending in May were aided by a consumer still shopping heavily online, along with a boost in business-to-business shipment spending as vaccinations picked up and more firms reopened in the spring. 

"Fourth quarter operating results increased primarily due to volume growth and disciplined revenue and portfolio management," the company said in its earnings statement. "These factors were partially offset by costs to support strong demand, increased variable compensation expense, and higher labor rates." 

FedEx's outlook also topped estimates. The company said it expects full-year adjusted earnings to come in between $20.50 and $21.50 a share, excluding some items, whereas consensus analysts were looking for $20.48 per share. 

With shipping demand elevated, the company has also demonstrated strong pricing power, which helped support margins and overall profits for the quarter. FedEx Express package and freight standard rates rose by an average of 4.9% for many U.S. services at the beginning of the year, and a number of other surcharges also took effect later on in 2021. This extended a number of surcharges introduced in 2020 as the shipping giant passed on costs associated with the higher volumes to its customers. 

A FedEx driver delivers a cart of packages, Thursday, May 6, 2021 in New York. (AP Photo/Mark Lennihan)
A FedEx driver delivers a cart of packages, Thursday, May 6, 2021 in New York. (AP Photo/Mark Lennihan)

And with businesses across industries reporting supply chain constraints and shortages, many customers may have ramped up spending on the company's higher-priced express shipping options in the fourth quarter, some analysts suggested. Business shipments tend to provide higher margins in general for FedEx than residential deliveries do, offering another point of strength for the company's fourth quarter.

"We believe a strong pricing trend and cyclical improvement in B2B [business-to-business] volumes provide support for margin expansion in Ground and Express," UBS analyst Thomas Wadewitz wrote in a note ahead of results. The firm rates FedEx shares as a Buy, with a $383 12-month price target. 

Shares of FedEx have increased by just over 17% for the year-to-date, outperforming the S&P 500's 13.6% increase over that time period.

This post is breaking. Check back for updates.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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