What to expect from FedEx’s first quarter?


FedEx (NYSE: FDX) is expected to release its first quarter 2021 results on Tuesday, September 21. We expect FedEx to likely post revenues and profits above street expectations. With an increase in the number of Covid-19 cases in the United States, it is likely that FedEx’s overland shipment volume trended upward during the quarter, which bodes well for its overall revenue growth. ‘business. Lately, the company has seen its margins increase, which has contributed to the growth of its profits. However, higher input costs may have helped contain overall margin growth in the first quarter.

When it comes to FDX stock, our forecast indicates that FedEx’s valuation is around $ 348 per share, which is 36% above the current market price of around $ 255, implying that the stock FDX is attractively valued at its current levels. Our interactive dashboard analysis on FedEx Pre-Earnings has additional details.

(1) Expected revenue higher than consensus estimates

Trefis estimates FedEx’s first quarter 2022 revenue to be around $ 22.0 billion, slightly above the consensus estimate of $ 21.9 billion. FedEx, in recent quarters, has seen an increase in demand for shipments, mainly due to an increase in e-commerce orders, with people preferring to stay at home during the pandemic. However, Fedex

its counterpart – UPS – reported a drop in ground shipments in the second quarter, which also negatively impacted FDX’s inventory. While this is also expected to impact FedEx, over the past few months the total number of Covid-19 cases has increased, meaning overland shipments may continue to increase in the near term. Looking back to the fourth quarter of fiscal 2021, revenue increased 30% to $ 22.6 billion, with the ground segment increasing 27% year-on-year, compared to a 32% increase for Express.

and a 38% jump in the Freight segment. Our dashboard on FedEx revenue offers more details on the business segments.

2) EPS likely to be higher than consensus estimates

FedEx’s adjusted earnings per share for the first quarter of fiscal 2022 is expected to be $ 5.11 according to Trefis analysis, or 2% above the consensus estimate of $ 5.00. FedEx’s net income of $ 1.4 billion in the fourth quarter of fiscal 2021 reflects a sharp 2-fold increase from its figure of $ 663 million in the previous year quarter. This can be attributed to higher revenues and expanding margins. However, rising costs could impact overall profit growth in the first quarter.

(3) Estimate of the share price 36% above the current market price

Through our FedEx Rating, with an EPS estimate of around $ 21.33 and a P / E multiple of 16x in 2022, that translates to a price of $ 348, which is roughly 36% above the current market price of around 255. $. Although FedEx’s 16x P / E multiple is slightly above levels seen in recent years, it is justified given the strong earnings growth. FedEx’s adjusted EPS fell from $ 15.57 in fiscal 2019 to $ 9.52 in 2020, before rising to $ 18.23 in 2021, and is now expected to hit $ 21.33 in 2022.

Note: P / E multiples are based on the stock price at the end of the year and reported (or expected) profits for the entire year

Although FDX stock may experience a short-term increase, 2020 has created many price discontinuities that can provide some interesting trading opportunities. For example, you’ll be surprised at how counterintuitive stock valuation is to United Parcel Service vs Sprouts Farmers Market.

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