FedEx Beats on Revenue, Misses on EPS
FedEx (NYSE:FDX), the global shipping and logistics company, released its earnings report for the third quarter of its fiscal 2025 on March 20. The company reported a slight miss on adjusted earnings per share (EPS), posting $4.51 against an expected $4.56. However, it achieved commendable year-over-year growth of 16.8% from $3.86 in the prior-year period. Revenue of $22.2 billion beat the consensus expectation of $21.9 billion, and was up by a modest 2.3% from $21.7 billion in the same period last year. Overall, the quarter's results reflected FedEx's resilience amid macroeconomic pressures, although management did revise its earnings expectations for the full year in light of ongoing challenges.
Metric Fiscal Q3 2025 Fiscal Q3 2025 Analysts' Estimate Fiscal Q3 2024 % Change
EPS (adjusted) $4.51 $4.56 $3.86 16.8%
Revenue $22.2 billion $21.9 billion $21.7 billion 1.9%
Operating income (adjusted) $1.51 billion N/A $1.36 billion 11.0%
Operating margin (adjusted) 6.8% N/A 6.2% 60 basis points
Source: Analysts' estimates for the quarter provided by FactSet.
Company Overview and Strategy
FedEx, an integral player in the global logistics industry, operates across various business segments, including Federal Express, FedEx Ground, and FedEx Freight. Known for its reliable delivery services, it faces constant competitive pressure from rivals like UPS and DHL. Its strategic approach focuses heavily on integration within its segments to boost operational efficiency. This is carried out through programs like "One FedEx," designed to unify operations and streamline processes.
Recent strategic initiatives have emphasized the importance of technology in FedEx's operations, with investments aimed at enhancing productivity and customer satisfaction. The introduction of FedEx Dataworks, a data-driven solution platform, underscores its commitment to digital transformation. Tackling e-commerce-driven growth and adapting to its demands also remains a priority.
Quarter Overview: Performance and Initiatives
In the fiscal quarter, which ended Feb. 28, FedEx witnessed a mix of positive developments and ongoing challenges. The Federal Express segment delivered a strong revenue performance. The 6% increase in U.S. domestic package revenue -- driven by an uptick in average daily package volume -- was noteworthy. However, the FedEx Freight segment experienced a 5% decline in year-over-year revenue, a reflection of decreased shipment numbers and lighter average weights per shipment. Operating income for this segment fell by 23%.
Pivotal strategies such as the DRIVE initiative, aimed at cost reductions and operational improvements, continued to pay off. The CEO highlighted improved profitability despite the challenging environment. Additionally, the December announcement of the planned spin-off of FedEx Freight signaled a move toward operational simplification and targeted value creation. The company's investments in technology and digital transformations were reflected in developments in FedEx Dataworks, which is intended to refine efficiency and customer engagement.
However, competitive pressures from the likes of Amazon 's internal logistics unit are affecting pricing and service dynamics. Macroeconomic factors, notably the U.S. industrial sector's softness, led to shifts in service demand.
Notably, FedEx returned value to shareholders through $500 million in share repurchases during the quarter. Its financial position remains solid, with cash reserves reported at $5.1 billion as of Feb. 28.
Looking Ahead: Future Expectations
Management provided a cautious outlook for the remainder of its fiscal 2025, adjusting its full-year guidance downwards. Revenue is now expected to be in the range of flat to down slightly compared to the previous guidance for flat revenue. The EPS guidance was lowered to a range of $15.15 to $15.75 from the earlier $16.45 to $17.45. This conservative stance reflects persistent macro uncertainties.
Investors should closely watch FedEx's further integration efforts and its DRIVE program, which is aimed at achieving $2.2 billion in cost savings. Capital investments (with an emphasis on network optimization and automation) are expected to be $4.9 billion, down from a previously planned $5.2 billion. As FedEx navigates competitive and macroeconomic challenges, key areas to watch in the upcoming quarters will include its operational efficiency efforts and the potential impacts of economic conditions.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor's total average return is 838% — a market-crushing outperformance compared to 164% for the S&P 500.*
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
*Stock Advisor returns as of March 18, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Amazon and FedEx. The Motley Fool has a disclosure policy.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
9 hours ago
- Globe and Mail
Prediction: This High-Yield Dividend Stock Will Crush the S&P 500's Returns Over the Next Decade
A high dividend yield often signals that a company's growth days are in the rearview mirror. In many cases, the high-yielding income stream makes up most, if not all, of the return the company delivers for investors. Given the lackluster returns of many high-yielding dividend stocks, investors seeking market-crushing returns will probably overlook Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) because of its more than 5% yield. However, that could prove to be a big mistake. I predict this leading renewable energy dividend stock will crush the S&P 500 's returns over the next decade. Here's why. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » A strong base return A high-yielding dividend is sometimes a warning sign for investors. The company might have a weak financial profile or lackluster growth prospects. Neither of those is an issue for Brookfield Renewable. The opposite is true for this company. For starters, the company backs its lucrative dividend with a top-notch financial Renewable sells about 90% of the renewable energy it produces under long-term, fixed-rate power purchase agreements (PPAs). Those PPAs have an average remaining term of 14 years while indexing about 70% of the company's revenue to inflation. That means Brookfield can bank on generating very predictable and steadily growing cash flow. The company estimates that the inflation escalation clauses embedded within its existing PPAs will power 2% to 3% annual growth in its funds from operations (FFO) per share. Meanwhile, power rates have been growing faster than inflation in recent years. That trend seems likely to continue, given the expected surge in power demand driven by catalysts like AI data centers. Brookfield anticipates that margin enhancement activities such as securing higher market power rates as legacy PPAs expire will add another 2% to 4% to its FFO per share each year. On top of generating very stable and steadily rising cash flow, Brookfield has a strong investment-grade balance sheet. It funds its business with long-term, fixed-rate debt and keeps ample liquidity on hand, to the tune of $4.5 billion at the end of the first quarter. Brookfield also routinely recycles capital, selling mature assets to fund higher-returning new investments, which enables it to maintain its financial flexibility. The company's combination of stable cash flow and balance sheet strength puts its more than 5%-yielding dividend on a sustainable foundation. It should provide investors with very bankable dividend income. A powerful growth profile Brookfield Renewable can grow its FFO per share at a 4% to 7% annual rate without investing any additional capital. That would be a solid growth rate for a high-yielding dividend stock. However, the company has the financial flexibility to invest heavily in growing its platform. It's currently targeting to deploy $8 billion to $9 billion or more into new growth opportunities over the next five years. Some of that capital will go into its massive backlog of renewable energy development projects. Brookfield currently has 74 gigawatts (GW) in its advanced-stage pipeline. That's nearly double its current operational capacity (43.3 GW). The company is ramping up its development capabilities to reach an annual commissioning run rate of 10 GW per year, which it expects to achieve by 2027. That's up from 8 GW this year. Development projects will add another 4% to 6% to its FFO per share each year. On top of that, the company plans to continue making accretive acquisitions, largely funded through capital recycling, to further accelerate its FFO growth rate. Brookfield recently closed its acquisition of European renewable power developer Neoen. Meanwhile, it agreed to buy National Grid 's U.S. onshore power platform, National Grid Renewables. Add it all up, and Brookfield believes it can grow its FFO per share at a more than 10% annual rate through 2034. The company's growth is highly visible and secured through 2029 and increasingly visible and secured over the subsequent five-year period. That easily supports its plan to increase its dividend by 5% to 9% annually. Brookfield has grown its payout at a 6% compound annual rate since 2001. It all adds up to the potential for producing market-crushing returns Brookfield Renewable pays a more than 5% yielding dividend, which provides investors with a strong base return. On top of that, the company expects to grow its earnings per share at a rate of more than 10% annually for the next several years. That should easily support its plan to increase its already high-yielding payout by 5% to 9% per year. Put it all together, and Brookfield could produce total annual returns in the mid-teens, which should crush the S&P 500's return over the next 10 years. That makes it a great stock to buy and hold right now. Should you invest $1,000 in Brookfield Renewable right now? Before you buy stock in Brookfield Renewable, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Brookfield Renewable wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Globe and Mail
10 hours ago
- Globe and Mail
Why ABM Industries Topped the Market Today
ABM Industries (NYSE: ABM) stock kicked off the trading week on a high note Monday, closing more than 3.5% higher in price following two recommendation upgrades from analysts tracking the stock. That performance was more than good enough to eclipse the bellwether S&P 500 index, which essentially flatlined that day. Investors overreacted to results, says analyst Those pundit updates came one business day after ABM released its second quarter of fiscal 2025 earnings report. The company notched a minor beat on the consensus analyst estimate for revenue but missed slightly on that for profitability. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Investors didn't greet this development warmly, and their immediate reaction as a group was to trade out of ABM's shares. The situation flipped on Monday, however, as the pair of pundits published new takes on the stock before market open. The first upgrade came from Baird's Andrew Wittman. He upgraded his recommendation on ABM to outperform (i.e., buy) from the previous neutral at a price target of $56 per share. According to reports, Wittman feels the sell-off was unjustified and leaves the stock attractively priced, especially since the company has been effective at securing new work. Good business with business and industry His peer Joshua Chan at UBS also became notably more bullish on ABM with a recommendation change to buy from neutral (in his case, tagging the stock with a $50 per share price target). According to reports, Chan was particularly encouraged by renewed growth in the company's core business and industry segment. Personally, I'd fall between those bearish investors selling off ABM stock Friday and the analysts upping their recommendations. Yes, the company has reported some encouraging developments of late, but it's neither a strongly growing business nor a high-yielding dividend payer. I'd probably look elsewhere for stocks with better potential. Should you invest $1,000 in Abm Industries right now? Before you buy stock in Abm Industries, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Abm Industries wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Cision Canada
13 hours ago
- Cision Canada
Pascal Desroches to Update Shareholders at the 2025 Mizuho Technology Conference on June 10
DALLAS, /CNW/ -- Tomorrow, AT&T's chief financial officer will participate in a fireside chat where he will discuss the Company's multi-year strategic growth plan. Key Takeaways: AT&T reiterates full-year 2025 financial and operational guidance. AT&T is pursuing a multi-year strategic growth plan that centers around putting customers first, continued network investment and increased capital returns to shareholders. Pascal Desroches, chief financial officer, AT&T Inc. (NYSE: T), will speak tomorrow at the 2025 Mizuho Technology Conference where he will provide an update to shareholders. AT&T continues to make progress on becoming the best connectivity provider in America The Company continues to execute on its multi-year growth plan and differentiate its position within the connectivity industry by increasing its opportunity to serve customers how they want to be served, by one provider with fiber and 5G in a converged manner. The Company recently announced an agreement to acquire substantially all of Lumen's Mass Markets fiber internet connectivity business. The transaction, which is expected to close in the first half of 2026, will expand investment in critical U.S. connectivity infrastructure, create new middle-class jobs and accelerate high-speed fiber internet access to millions of Americans. Additionally, this deal will enable AT&T to significantly expand access to AT&T Fiber in new major metro areas and allow the Company to serve more customers with 5G and fiber together. AT&T continues to extend its fiber leadership with plans to reach approximately 60 million total fiber locations by year-end 2030. 1 Ultimately, this transaction aligns with the priorities outlined at AT&T's 2024 Analyst & Investor Day, including its goal of becoming the best connectivity provider in America while providing more value to customers, shareholders and the Company. AT&T is seeing solid customer demand and remains on track to achieve its 2025 financial and operational guidance The wireless industry remains both healthy and competitive, and the Company is pleased with how the Mobility business is performing in the second quarter. In Consumer Wireline, the Company continues to expand access to AT&T Fiber – America's fastest internet with the most reliable speeds. 2 Trends in AT&T Fiber penetration rates remain consistent, with net adds varying from quarter to quarter based primarily on the pace of new fiber locations passed, seasonality and marketplace dynamics. For the second-quarter 2025, the Company continues to expect capital investment* in the $4.5 billion to $5 billion range and free cash flow* of approximately $4 billion. AT&T reiterates all full-year 2025 financial and operational guidance. Additionally, the Company continues to operate the business to achieve the financial plan and capital returns outlined at its 2024 Analyst & Investor Day. AT&T remains committed to repurchasing shares under the previously announced $10 billion authorization, with plans to repurchase at least $3 billion of common stock by year-end and the remainder during 2026. Conference details and more are available on the AT&T Investor Relations website Full conference details are posted on the AT&T Investor Relations website, including a replay of the webcast. To automatically receive AT&T financial news by email, please subscribe to email alerts. 1 "Total locations" includes consumer and business locations (i) passed with fiber and (ii) served with fiber through commercial open-access providers. 2 Limited availability in select areas. Based on analysis by Ookla® of Speedtest Intelligence® data nationwide Speed Score and Consistency Score for Q3–Q4 2024. Ookla trademarks used under license and reprinted with permission. *Due to high variability and difficulty in predicting items that impact cash from operating activities, capital expenditures and vendor financing payments, the Company is not able to provide a reconciliation between second quarter 2025 projected capital investment or free cash flow and the most comparable GAAP metrics without unreasonable effort. Cautionary Language Concerning Forward-Looking Statements Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at
