FedEx Higher Pre-Market Following Earnings Beat

March 19, 2021

Shares in FedEx are trading a little higher pre-market on Friday with the company’s stock price extending gains on the back of a solid quarterly earnings report. FedEx shares have rallied recently with price making its way back up off the 234.75 lows to highs of around 273 currently.

This week, FedEx reported quarterly earnings per share of $3.47 over Q4 2020. This beat estimates for a $3.30 EPS. Revenues were also higher than expected at $21.51 billion vs $19.97 expected.

Unprecedented Seasonal Demand

FedEx CEO Fred Smith pointed to “unprecedented holiday season demand” as a result of the pandemic.

With social restrictions and lockdowns in place across most of the firm’s key markets, the demand for its services was far higher than usual. Revenues alone were up 23% on the same quarter a year earlier, reflecting just how sharp the increase in demand was.

EPS was up almost double from the same period a year prior, again reflecting the company’s strong performance.

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Downside From February Storms Noted

Looking ahead, Smith forecasts:

“demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future.”

However, the company did note that extremely bad weather over February in the US impacted operations with several of its key operations centers. This included the FedEx Express hub in Memphis losing operating income in the $350 million region.

The FedEx Express CEO Don Colleran released a statement on March 1^st saying:

“As manufacturers obtain approval to ship COVID-19 vaccines with greater temperature ranges and varying dosing allotments, we anticipate more of these packages moving to more places through our global network.”

Split Risks Ahead

In response to the earnings report, FedEx shares jumped 3% in after-hours trading and have since continued higher with price now back up at the recent highs ahead of the open on Friday.

Looking ahead, the risks are broadly split for FedEx. A general improvement in the economy is a supportive factor. However, the return to normal conditions also likely to see a drop in demand for the delivery provider.

FedEx Breaking Out?

FedEx has now broken above the falling wedge pattern which had framed the correction from December highs.

Price is now sitting above the 255.70 level. While that holds as support, the focus is on a continued push higher with a break of the 274.35 level the next objective for bulls.

By Orbex