FedEx Profit Rises, Backs FY Outlook; Shares Gain 5%

(RTTNews) - Package delivery giant FedEx Corp. (FDX), Wednesday reported an increase in profit for the second quarter, driven largely by strong revenue growth at FedEx Ground segment. Both earnings and revenues for the quarter trumped Wall Street estimates, sending its stock up by 5 percent in after-hours trading.

Memphis, Tennessee-based FedEx's second-quarter profit rose to $691 million or $2.44 per share from $663 million or $2.31 per share last year.

Adjusted earnings for the quarter rose to $2.58 per share from $2.16 per share last year. On average, 25 analysts polled by Thomson Reuters expected earnings of $2.51 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased 4 percent to $12.45 billion from $11.94 billion last year. Wall Street analysts had a consensus estimate of $12.43 billion.

Revenues for FedEx express declined 6 percent to $6.59 billion, while FedEx ground revenues increased 32 percent to $4.05 billion from last year. Revenues for FedEx freight slipped 2 percent to $1.55 billion.

Looking forward, FedEx continues to expect adjusted earnings of $10.40 to $10.90 per share for 2016. Analysts currently estimate earnings of $10.55 per share for 2016.

"We expect our solid earnings growth to continue in the second half of our fiscal year despite weakness in industrial production," said CFO Alan Graf. "Our improved financial results are being driven by better revenue quality, e-commerce growth and the successful ongoing execution of our profit improvement initiatives."

Being a global transportation companies, the performance of shipping giants like FedEx and its rival United Parcel Service Inc. (UPS) are considered a strong barometer of overall consumer attitude and economy.

FDX closed Wednesday's trading at $148.83, up $4.14 or 2.86%, on the NYSE. The stock further gained $8.27 or 5.56% in the after-hours trade.