Daily Brief - Ground Gains

TLDR: FedEx Corp. delivered a strong fiscal performance with a full-year adjusted EPS of $17.80. For the quarter, FedEx reported $22.1 billion in revenue and $1.47 billion in net income, demonstrating resilience amid economic challenges.

FedEx's package volume offers a snapshot of consumer activity. U.S. Overnight Box and Envelope volumes dropped by 2% and 10% respectively, while Ground Commercial shipments rose by 3% and Economy shipments grew by 5%, reaching 762,000 packages.

These mixed results indicate a shift in spending patterns, with consumers potentially tightening budgets or choosing more economical shipping options.

However, the increase in ground commercial volume highlights robust demand in the e-commerce and business sectors, underscoring that both consumers and businesses continue to rely on FedEx for their shipping needs.

FedEx's DRIVE initiatives have resulted in significant cost savings, enhancing operating margins. The company's operating margin rose to 8.5% (non-GAAP) from 8.1% last year.

Looking forward, FedEx anticipates low-to-mid single-digit percent revenue growth for fiscal 2025, with an adjusted EPS projected between $20.00 and $22.00. This cautious optimism reflects current economic conditions and fuel price expectations.

FedEx's Q4 FY24 earnings report presents a nuanced view of the U.S. consumer market. While some segments show signs of slowing, overall demand for FedEx's services remains strong. Strategic cost management and operational efficiency position the company for continued resilience amid economic uncertainties.

Scenario Spotlight: What next?

The chart above illustrates FedEx's historical 1-month performance following a big one-day jump in its stock price.

Market Movers: Response from FedEx peers

Here is the historical 1-month response from FedEx's peers following a significant one-day increase in the stock's price:

1. XPO Logistics - 9.93%
2. Old Dominion - 9.02%
3. CH Robinson - 7.02%
4. J.B. Hunt - 5.94%
5. UPS - 4.60%
6. Ryder System - 0.00%

Earnings Spotlight: Nike reports tomorrow

Nike is poised to report its slowest revenue growth in two years for the fourth quarter, attributed to a lack of innovation amidst intensifying competition from Deckers' Hoka and Roger Federer-backed On.

The company's revenue is expected to inch up by just 0.2%, reaching $12.85 billion compared to the same period last year, according to LSEG data. Despite this modest revenue increase, analysts anticipate a significant boost in adjusted earnings, projecting a 26.4% rise to 83 cents per share.