Holiday Update, TNT Express Impact in Focus When FedEx Reports -- Earnings Preview

By Paul Ziobro 

FedEx Corp. is scheduled to announce its fiscal third-quarter earnings after the market close Tuesday. Here's what you need to know:

EARNINGS FORECAST: Analysts polled by Thomson Reuters expected FedEx to earn $2.62 per share, compared with $2.51 in the year-earlier quarter. FedEx said in December that it expected adjusted fiscal 2017 earnings of $11.85 to $12.35.

REVENUE FORECAST: Revenue of $14.99 billion is forecast by analysts, compared with $12.7 billion a year earlier.

WHAT TO WATCH:

-- HOLIDAY WRAP: FedEx will provide the final results for the holiday season. Due to its reporting schedule, FedEx splits the performance for the key period between its second and third quarters. FedEx expected to handle 10% more packages between Thanksgiving and December, as the surge in online shopping means more business. While the added volume boosts revenue, FedEx and rival United Parcel Services Inc. are both spending heavily to keep up with that business, hurting margins.

-- PRICING: Like UPS, FedEx has raised prices to cope with the higher demand, and investors will examine the carrier's results to see how successful it was at getting big customers to agree to them. FedEx has been willing to turn away business from some large e-commerce shippers because they didn't accept the higher rates.

-- TNT UPDATE: Investors anticipate an update on FedEx's recent acquisition of TNT Express. FedEx has been integrating the operations of the Dutch parcel-delivery company since buying it last May for $4.8 billion. The process appears to have gone more quickly than expected, as FedEx promoted Dave Bronczek, the point man on the integration, to president and operating chief 11 months earlier than expected. Citi analysts see this as a positive sign that FedEx will be able to squeeze $750 million in annual cost savings from buying TNT by 2020.

-- AMAZON BUSINESS: Some analysts wonder whether FedEx could be in line to pick up some of the millions of packages shipped by the online retailing giant Amazon.com Inc. FedEx has long helped the U.S. Postal Service ship packages during the day, when most planes are grounded at airports waiting to make overnight deliveries. Citi analysts think that FedEx might be able to provide similar service for Amazon, although this comes as Amazon is making moves to build out its own delivery network.

Write to Paul Ziobro at [e-mail]

(END) Dow Jones Newswires

March 20, 2017 14:42 ET (18:42 GMT)

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