Shares of FedEx Corporation (FDX) jumped more than 3% yesterday, touching a 52-week high of $161.65 after the company reported robust financial numbers for the first quarter of fiscal 2015.
However, the company ended yesterday’s trading session a trifle lower at $159.71, reflecting a solid 33% return over the past 12 months.
Robust Quarterly Numbers
Yesterday, this global express delivery services provider reported fiscal first-quarter earnings of $2.10 per share. Earnings steered ahead of the Zacks Consensus Estimate of $1.95 and also fared significantly better than the year-ago adjusted number of $1.53 per share. Growth came primarily on the back of solid financial results at FedEx Ground, volume and revenue growth at FedEx Freight and a rise in U.S. domestic volumes at FedEx Express.
FedEx reported revenues of $11.7 billion in the quarter, up about 6% from $11.0 billion a year ago and also ahead of the Zacks Consensus Estimate of $11.4 billion.
Operating income improved 24% year over year to $987 million in the quarter, resulting in an operating margin of 8.5%, up 130 basis points (bps) from 7.2% in the year-ago period. The growth was driven by higher volumes and improved yields at three segments.
Estimate Revisions Reflect Strength
Despite the strong price appreciation, the stock has room for plenty of upside, given the positive estimate revisions witnessed over the past 7 days. For the current year, the company has witnessed three upward revisions over the last one week with the Zacks Consensus Estimate for earnings moving up from $8.79 to $8.85.
Our Analysis
We expect FedEx to continue witnessing earnings momentum and enjoy growth buoyed by long-term expansion opportunities. The company is concentrating on network realignment to match the current demand level, thus improving its performance and gaining competitive advantage over the likes of United Parcel Service, Inc. (UPS) and Radiant Logistics, Inc. (RLGT).
A Stock to Consider
FedEx currently carries a Zacks Rank #3 (Hold). A better-ranked stock in this sector is Air Transport Services Group, Inc. (ATSG), which holds a Zacks Rank #2 (Buy).
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