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FedEx Corp. (FDX
) on Sept. 21 reported stronger than expected quarterly earnings results, while expressing confidence in both its own and the U.S. economy's growth prospects. However, its stock fell after the company issued guidance that was below consensus analyst forecasts.
The Memphis (Tenn.) package deliverer earned $1.53 per diluted share for the first quarter ended Aug. 31, compared to $1.10 per diluted share a year ago. The company, which is seen as a bellwether for the U.S. economy, said revenue surged 11% to $8.54 billion year over year.
"We remain confident in our ability to achieve solid profitable growth by taking advantage of strong international trade trends, increased demand for fast-cycle logistics and the expansion of online purchasing," said Frederick W. Smith, chairman, president and chief executive officer, in a press release. "The global economy is growing at a healthy pace with the U.S. economy growing at a moderate, sustainable rate."
The company also revised its earnings forecasts, after reaching a tentative agreement on a new labor contract with its pilots. The agreement, which is between FedEx Express and the Air Line Pilots Association, Int'l. (ALPA), the collective bargaining representative for FedEx Express pilots, will be subject to a ratification vote during the fiscal second quarter.
FedEx now expects second quarter earnings to be $1.45 to $1.60 per diluted share, and earnings for the year to be $6.30 to $6.65 per diluted share, reflecting a 20-cents charge for costs related to the new pilot contract if ratified. Excluding the impact of the up-front pilot compensation, the fiscal 2007 earnings guidance range was increased by 5 cents per share from the company's initial guidance.
FedEx's stock price fell 1.7% to $105.70, erasing early gains.
Standard & Poor's Corp. analyst Jim Corridore said FedEx beat his expectations for August quarter earnings per share by a penny. In a research note Sept. 21, he reiterated a strong buy rating on the stock. But he also slashed his fiscal year 2007 EPS estimate to $6.65 from $6.80, noting an expected slowing of the U.S. economy. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)