FedEx Shows Economy Still Humming (FDX)

FedEx (FDX) beat the consensus estimate by a nickel and issued guidance that, adjusted for stock option expense, is ahead of expectations. The stock is up in pre-market trading.

As we discussed last week, FedEx has more leverage to the economy than rival United Parcel Service (UPS). Their performance shows that the economy continues to be strong, and the guidance shows that there are no signs of a significant slowdown so far. The seemingly endless chatter over when the Fed will be through raising rates looks likely to continue for a while longer.

As Yahoo! reported yesterday,

FedEx Corp., operator of the world’s largest express transportation company, on Wednesday reported a 27 percent jump in fourth-quarter earnings, citing solid economic growth in U.S. and international markets.

Net income rose to $568 million, or $1.82 per share, from $448 million, or $1.46 per share, a year ago. Revenue totaled $8.49 billion, up 10 percent from $7.72 billion the previous year.

The results beat Wall Street expectations by a wide margin. On average, analysts were expecting quarterly profit of $1.77 per share on sales of $8.42 billion, according to a poll by Thomson Financial.

Frederick W. Smith, chairman, president and chief executive officer, said, “We remain optimistic about the global economic environment for fiscal 2007 and our ability to effectively manage our business.”

Looking ahead, FedEx said it expects earnings to range between $1.45 and $1.60 per share in the first quarter of fiscal 2007 and $6.45 to $6.80 per share for the full year. Included in this forecast is the company’s adoption of new accounting rules for stock options and other share-based payments, which is expected to reduce earnings by about 15 cents per share for the year.

On average, analysts are currently predicting first-quarter profit of $1.43 per share and earnings of $6.73 per share for fiscal 2007.

FDX 1-yr chart: