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FedEx Beats Earnings Estimates, Misses Revenue, and Raises Full-Year EPS Guidance

FedEx Corporation (FDX) has announced its third-quarter earnings for fiscal year 2023.

Although the company missed revenue estimates, it managed to beat earnings per share (EPS) expectations, leading to an 8% rise in its share prices.

The delivery giant reported EPS of $4.87, which was 68 cents higher than the estimated $4.19.

Additionally, the company raised its full-year EPS guidance to $14.60-$15.20 per share, exceeding the expected $13.56 per share.

The earnings report showed that FedEx’s large-scale cost-cutting efforts, referred to as “Drive,” are taking hold, leading to an improved outlook for the current fiscal year.

The company’s cost actions are aimed at improving efficiency, and it continues to move with urgency to achieve this goal.

The report also revealed that FedEx missed margin estimates for its Express segment, which accounts for about 50% of its revenue.

The Express margin was 1.2%, compared to the estimated 2%, although this is an improvement from the previous year’s margin of over 4%.

However, the company beat margin estimates for its Ground and Freight networks, with Ground’s revenue per package increasing by 11% and Freight’s revenue per shipment rising by 21%.

The quarter’s real story was pricing power, as FedEx was able to take advantage of a general pricing increase it announced in January.

Donald Broughton, Managing Partner of Broughton Capital, commended FedEx’s ability to make money in Express despite the challenging conditions, noting that the international priority Express business is their highest incremental and decremental margin business.

He also expects the company to gain market share against UPS, which is trying to renegotiate its contract with the Teamsters.

Investors will be looking forward to more details about Drive at FedEx’s event on April 5th in New York City.

The reopening of China will also be of interest, given the company’s exposure to the country.

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