Fedex (FDX) Q1 2024 Earnings Beat Expectations, Driven by Cost Savings and Volume Diversion

By Don Francis, Editor
September 23, 2023 12:59 PM UTC
Fedex (FDX) Q1 2024 Earnings Beat Expectations, Driven by Cost Savings and Volume Diversion

Deutsche Bank's Amit Mehrotra raised their price target on Fedex (NYSE: FDX) by 15.7% from $255 to $295 on 2023/09/22. The analyst maintained their Strong Buy rating on the stock.

Assessing Fedex's Q1 2024 earnings reported, released 2023/09/20, Mehrotra noted that management is "successfully executing on its ambitious $1.8B DRIVE cost savings program for this year." Further, Fedex clearly benefited from UPS-related volume diversion in Q1, the analyst said, as demonstrated by "the big margin beat at Ground."

For Q1 2024, FedEx reported EPS of $4.55, beating the Zacks Consensus Estimate of $3.70 by 32.3%, and surpassing Q1 2023's $3.44 by the same margin. However, the company's revenue of $21.68B missed the Zacks Consensus Estimate by 0.71% and fell 6.5% compared to Q1 2023's $23.2B. FedEx also disclosed a capital expenditure (capex) of $1.29B for the quarter.

Looking ahead to FY 2024, FedEx's management guided for an EPS range of $17.00 to $18.50, with flat year-over-year revenue. The company also announced a capex target of $5.7B for the fiscal year. President & CEO Raj Subramaniam expressed optimism, stating, "We started FY 2024 with strong momentum as our global transformation actions take hold and drive improved results." Subramaniam highlighted the outstanding performance of FedEx Ground in Q1, along with improved earnings at FedEx Express and expense controls across the organization, which contributed to the better-than-expected financial performance.

Executive Vice President & CFO John Dietrich emphasized the significant opportunity FedEx has to create long-term value for its stockholders. Dietrich stated, "As we look ahead to the rest of the year, my highest priority is building on this momentum to improve margins and returns."

In addition to Amit Mehrotra's rating and price target adjustment, there were other analyst updates on September 22, 2023. BMO Capital's Fadi Chamoun raised their price target by 3.6% to $280 and maintained a Hold rating on the stock. Loop Capital's Rick Paterson raised their price target by 7.8% to $255 and also maintained a Hold rating on the stock.

Currently, 71.4% of top-rated analysts rate FDX as a Strong Buy or Buy, while 28.6% see it as a Hold. Notably, no analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that FDX's upcoming year will deliver earnings per share (EPS) of $23.07. If the analysts are correct, FDX's next yearly EPS will be up by 39.7% on a year-over-year basis.

Since FDX's latest quarterly report on September 20, 2023, the stock price has increased by 4.2%. Year-over-year, the stock has risen by an impressive 68.9%. During this period, FDX has outpaced the S&P 500, which has seen a 15% increase.

Amit Mehrotra, the Deutsche Bank analyst who raised the price target on FDX, is ranked in the top 14% out of 4,337 Wall Street analysts by WallStreetZen. With an average return of 4.1% and a 53.5% win rate, Mehrotra specializes in the Industrials and Energy sectors.

FedEx Corporation, founded in 1971 and based in Memphis, TN, is best known for its air delivery service, FedEx Express. The company also operates FedEx Ground, FedEx Office, FedEx Supply Chain, FedEx Freight, and other services through its subsidiaries. Additionally, FedEx assists in the transport of some U.S Postal Service packages through their Air Cargo Network contract.

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