FedEx Corporation (NYSE: FDX) is undergoing significant restructuring by merging its operating segments into a unified entity to enhance operational efficiency and cut costs. As the company navigates challenges like inflation, supply chain issues, and increased competition, investors are keenly awaiting its forthcoming earnings report.
The shares of FedEx have shown considerable fluctuation since reaching a peak in mid-June. Currently, the stock has appreciated over 13% in the last six months, though it is trading at levels similar to a year ago. A notable selloff occurred in September after the company announced disappointing first-quarter results and revised its guidance downward.
Anticipated Q2 Results
FedEx is set to release its second-quarter earnings on December 19, following the market’s close. Analysts forecast adjusted earnings of $3.95 per share, slightly down from $3.99 per share in the same quarter last year, with revenues expected to stabilize around $22.12 billion for November.
For the first three months of FY25, FedEx reported revenues of $21.60 billion, a minor decline from $21.70 billion during the same period last year. Excluding special items, earnings fell to $3.60 per share in Q1, down from $4.55 per share a year prior. The unadjusted profit for the August quarter was $0.79 billion, or $3.21 per share, compared to $1.08 billion, or $4.23 per share in Q1 2024. Both revenue and earnings missed market expectations, contrasting with a strong performance in the previous quarter.
Future Outlook
Looking ahead, FedEx is expected to improve in the second half of the fiscal year, owing to ongoing structural cost reductions via its DRIVE initiative. The company is also poised to benefit from economic recovery and interest rate cuts by the Federal Reserve. In addition to streamlining operations, FedEx aims to provide customer value through digital advancements, focusing on enhancing supply chain efficiency and logistics. This technology enhancement is crucial as FedEx faces heightened competition from e-commerce giants such as Amazon.
CEO Rajesh Subramaniam stated during the Q1 earnings call, “In our surface operations, we will continue our focus on end-to-end efficiency, including optimizing our rental fleet and maximizing rail usage. For our air network and international operations, most savings in the upcoming months will come from Europe. While we achieved some savings in Europe during the last quarter, the majority of our anticipated DRIVE savings in that region are expected in the latter half of FY ’25 as we realize higher efficiency and productivity.”
Despite trading above its 52-week average for almost three months, FedEx’s stock saw a decrease throughout Friday’s trading session.
