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How Will FedEx's (FDX) Ground Unit Fare in Q2 Earnings?
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FedEx Corporation’s (FDX - Free Report) Ground unit, which accounts for more than 30% of the company’s total revenues and around 59% of its operating income, is expected to be boosted by high revenues when it reports second-quarter fiscal 2021 results (quarter ended Nov 30, 2020) . Notably, this is FedEx’s second-largest revenue-generating unit after the Express division.
FedEx Ground offers low-cost, day-certain service to any business address in the United States and Canada as well as residential delivery in the United States through its FedEx Home Delivery service.
Highlights of FedEx Ground’s Q1 Performance
FedEx Ground revenues rose 36% year over year to $7,040 million in first-quarter fiscal 2021 owing to residential delivery volume growth. Operating income came in at $834 million, up 30% year over year. Segmental operating margin shrank to 11.8% from 12.4% in the prior-year quarter.
Robust Revenues Likely to Reflect on FedEx Ground’s Q2 Results
The surge in e-commerce demand during the current coronavirus-ravaged times is likely to have boosted segmental revenues in the to-be-reported quarter with most people placing order online. Fedex Ground volumes are likely to have been aided by a shift from commercial business to business to the business-to-consumer pattern.
Backed by e-commerce growth, the Zacks Consensus Estimate for revenues in the fiscal second quarter at the FedEx Ground unit stands at $6,957 million, indicating an increase of 30.9% from the reported figure in the year-ago quarter. Residential volume growth is likely to have driven Fedex Ground revenues in the quarter to be reported.
However, the Ground segment’s results for the fiscal second quarter are likely to reflect the impact of high expenses. This is because of various types of investments like the ones pertaining to integrating smart post package volume into the Ground network. As a consequence, the Zacks Consensus Estimate for operating income in the fiscal second quarter at the FedEx Ground unit stands at $653 million, implying a 29% fall from the number reported sequentially due to high costs.
Overall Earnings & Revenue Projections
Regarding FedEx, which competes with United Parcel Service ((UPS - Free Report) ) in the package delivery space, the Zacks Consensus Estimate for earnings in the fiscal second quarter is pegged at $3.90, hinting at a 29.7% increase from the prior-year quarter’s reported figure. For quarterly sales, the consensus mark of $19.24 billion suggests an increase of 11% from the year-earlier quarter’s reported number.
Our Take
While high costs are likely to reflect on the Ground segment’s results for the fiscal second quarter, soaring e-commerce volumes are likely to have contributed to revenues at FedEx Ground, which handles e-commerce deliveries for many retailers. Growth in business-to-consumer volumes and residential deliveries might have boosted this presently Zacks Rank #3 (Hold) company’s overall performance in the fiscal second quarter.
Long-term expected earnings per share (three to five years) growth rate for Knight-Swift and Landstar are pegged at 15% and 12% respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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How Will FedEx's (FDX) Ground Unit Fare in Q2 Earnings?
FedEx Corporation’s (FDX - Free Report) Ground unit, which accounts for more than 30% of the company’s total revenues and around 59% of its operating income, is expected to be boosted by high revenues when it reports second-quarter fiscal 2021 results (quarter ended Nov 30, 2020) . Notably, this is FedEx’s second-largest revenue-generating unit after the Express division.
FedEx Ground offers low-cost, day-certain service to any business address in the United States and Canada as well as residential delivery in the United States through its FedEx Home Delivery service.
Highlights of FedEx Ground’s Q1 Performance
FedEx Ground revenues rose 36% year over year to $7,040 million in first-quarter fiscal 2021 owing to residential delivery volume growth. Operating income came in at $834 million, up 30% year over year. Segmental operating margin shrank to 11.8% from 12.4% in the prior-year quarter.
Robust Revenues Likely to Reflect on FedEx Ground’s Q2 Results
The surge in e-commerce demand during the current coronavirus-ravaged times is likely to have boosted segmental revenues in the to-be-reported quarter with most people placing order online. Fedex Ground volumes are likely to have been aided by a shift from commercial business to business to the business-to-consumer pattern.
Backed by e-commerce growth, the Zacks Consensus Estimate for revenues in the fiscal second quarter at the FedEx Ground unit stands at $6,957 million, indicating an increase of 30.9% from the reported figure in the year-ago quarter. Residential volume growth is likely to have driven Fedex Ground revenues in the quarter to be reported.
However, the Ground segment’s results for the fiscal second quarter are likely to reflect the impact of high expenses. This is because of various types of investments like the ones pertaining to integrating smart post package volume into the Ground network. As a consequence, the Zacks Consensus Estimate for operating income in the fiscal second quarter at the FedEx Ground unit stands at $653 million, implying a 29% fall from the number reported sequentially due to high costs.
Overall Earnings & Revenue Projections
Regarding FedEx, which competes with United Parcel Service ((UPS - Free Report) ) in the package delivery space, the Zacks Consensus Estimate for earnings in the fiscal second quarter is pegged at $3.90, hinting at a 29.7% increase from the prior-year quarter’s reported figure. For quarterly sales, the consensus mark of $19.24 billion suggests an increase of 11% from the year-earlier quarter’s reported number.
Our Take
While high costs are likely to reflect on the Ground segment’s results for the fiscal second quarter, soaring e-commerce volumes are likely to have contributed to revenues at FedEx Ground, which handles e-commerce deliveries for many retailers. Growth in business-to-consumer volumes and residential deliveries might have boosted this presently Zacks Rank #3 (Hold) company’s overall performance in the fiscal second quarter.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. (KNX - Free Report) and Landstar System, Inc. (LSTR - Free Report) . While Landstar carries a Zacks Rank #2 (Buy), Knight-Swift sports a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected earnings per share (three to five years) growth rate for Knight-Swift and Landstar are pegged at 15% and 12% respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>