FedEx Guidance is Soft By Ross Snel TheStreet.com Staff Reporter 6/23/2005 8:47 AM EDT
FedEx (FDX:NYSE - commentary - research) said earnings grew 9% in the latest quarter but it missed Wall Street expectations.
The Memphis, Tenn., shipper also unveiled a fiscal 2006 forecast that falls short of what analysts expected. The company predicted EPS for the coming year would range between $5.20 and $5.45 a share. That is weaker than the average Wall Street estimate for $5.48, according to Thomson First Call.
FedEx said net income in its fiscal fourth quarter, which ended May 31, was $448 million, or $1.46 a share, up 9% from $412 million, or $1.36 a share a year before. It missed the analyst consensus for $1.48.
Share slumped $2.67, or 3%, in premarket trading to $85.45.
Revenue rose 10% in the latest quarter to $7.72 billion from $7.04 billion a year earlier. On average, Wall Street analysts were expecting $7.82 billion.
"Our strong performance is a result of an effective strategy of cross-selling the full portfolio of FedEx services and delivering outstanding customer service," said Frederick W. Smith, the company's chairman and CEO.
"Our strategy is working well and we continue to innovate to bring more value to our customers worldwide. We see continued steady economic growth, both in the U.S. and in international markets, across many sectors. As we enter fiscal 2006, we are highly optimistic about the business and expect to achieve double-digit earnings growth," Smith said.
FedEx said it would benefit in the coming year from growing shipments in its International Priority, Ground and Freight businesses, as well as improvements in its operating margins. It also expects cash flow to improve.
For the current quarter, the first of fiscal 2006, FedEx said earnings would range between $1.10 to $1.25, below the $1.26 analyst consensus.
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