FedEx set to announce fiscal Q1 results amid high expectations and UPS volume shift

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FedEx set to announce fiscal Q1 results amid high expectations and UPS volume shift
Credit: © Reuters.

Logistics giant FedEx (NYSE: FDX ) is due to release its fiscal first quarter earnings today, with market observers expecting earnings per share (EPS) of $3.71 from a sales volume of $21.7 billion. This forecast comes in light of the recent labor negotiations at United Parcel Service (NYSE: UPS ), which concluded in late August, leading some businesses to redirect their volume to FedEx.

The potential labor stoppage at UPS had businesses on edge and the company's announcement last week that it anticipates its third-quarter EPS to be 25% lower than the consensus further fueled the shift. Citi analyst Christian Wetherbee attributed this downward revision to increased labor costs and the consequent volume shifts.

Raymond (NS: RYMD ) James analyst Patrick Tyler Brown noted that FedEx has benefited from this redirected volume. He also pointed out that FedEx's stock performance received a slight boost from the bankruptcy of Yellow (OTC: YELLQ ), a less-than-truckload service provider similar to FedEx, as well as FedEx's own cost-reduction initiatives.

Over the past few months, FedEx's shares have seen an approximate 8% rise. In June, despite reporting better-than-expected fiscal fourth-quarter results, the company provided weaker-than-anticipated guidance. Management projected earnings between $16.50 and $18.50 per share for fiscal year 2024, an increase from nearly $15 per share earned in fiscal year 2023. Although this represents growth compared to 2023, Wall Street was expecting around $18.30 per share at that time.

In response to these projections, FedEx shares dipped by 2.5%, closing at $224.73. However, they have since rebounded and closed on Tuesday at just under $250 a share. So far this year, FedEx shares have surged by 44%, outperforming the S&P 500 and Dow Jones Industrial Average , which have risen about 16% and 4% respectively.

The volume shift from UPS may influence FedEx's performance over the next one or two quarters. Investors will be closely watching for positive volume and pricing trends in addition to a strong fiscal first quarter to maintain the upward trajectory of the stock.

FedEx's management is set to discuss the results in a conference call at 17:30 ET (21:30 GMT) today.

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