FedEx Earnings Preview: Earnings Momentum In Full Swing, Biz Model Tailor-Made For Volume Explosion

Dec. 16, 2020 7:29 PM ETFedEx Corporation (FDX)12 Comments
Brian Gilmartin, CFA profile picture
Brian Gilmartin, CFA


  • EPS estimates continue to be revised higher.
  • Ground volumes rose 25% and 31% in the May and August '20 quarters, ample evidence of the strain ecommerce has put on the delivery chain.
  • From Nov '20 through May '21 FDX is facing very easy compares, then those compares get much tougher.
  • FDX's valuation is cheap on a PE-to-Growth basis, but now getting fully valued on a price-to-revenue basis.

When FedEx (NYSE:FDX) reports their fiscal Q2 '21 financial results after the bell on Thursday, December 17th, 2020, the Street will be looking for $4.01 in earnings per share (EPS) on roughly $19.5 billion in revenue, for expected y/y growth of 60% in EPS on 12% revenue growth.

The stock is up 99% year to date with the vast majority of that coming after the early July 2020 earnings report.

FedEx's stock peaked in January 2018 at $274-275 per share and since that time or rather since December 31, 2017, has returned about 7.5% per year versus the S&P 500's 13.60%.

One of the more remarkable statistics heard during the 2020 Covid-19 pandemic from CEOs and CFOs reporting their quarterly results since July 1, was the comment FedEx CFO's proxy made on the Sept '20 conference call:

The second and perhaps more profound trend is the acceleration of ecommerce. Pre-COVID, we projected that the U.S. domestic market would hit a 100 million packages per day by calendar year 2026. We now project that the U.S. domestic parcel market will hit this mark by calendar year 2023 pulling volume projections forward by three years from the previous expectation."

In the August '20 quarter or the 1st fiscal quarter of 2021, reported in Sept. '20, EPS beat estimates by a whopping 81% ($4.87 versus the estimate of $2.69) while revenue beat by 10% ($19.3 billion versus $17.5 billion).

For the 4th fiscal quarter of 2020, reported in early July '20, EPS estimates beat by 66%, on a 6% revenue upside.

It is clear that FedEx has EPS and revenue momentum (and the stock has traded like a "mo-mo" stock since early July '20), and now that the vaccine distribution is upon us, this could further catalyze FedEx's EPS and revenue momentum particularly for the second half of fiscal

This article was written by

Brian Gilmartin, CFA profile picture
Brian Gilmartin, is a portfolio manager at Trinity Asset Management, a firm he founded in May, 1995, catering to individual investors and institutions that werent getting the attention and service deserved, from larger firms. Brian started in the business as a fixed-income / credit analyst, with a Chicago broker-dealer, and then worked at Stein Roe & Farnham in Chicago, from 1992 - 1995, before striking out on his own and managing equity and balanced accounts for clients. Brian has a BSBA (Finance) from Xavier University, Cincinnati, Ohio, (1982) and an MBA (Finance) from Loyola University, Chicago, January, 1985. The CFA was awarded in 1994. Brian has been fortunate enough to write for the from 2000 to 2012, and then the WallStreet AllStars from August 2011, to Spring, 2012. Brian also wrote for, and has been quoted in numerous publications including the Wall Street Journal.

Disclosure: I am/we are long FDX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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