FedEx tops analysts estimate for revenue in Q3 but withdraws profit guidance for 2020

In its announcement on Tuesday, FedEx (NYSE:FDX) withdrew its previously given profit guidance for 2020. Blaming the Coronavirus pandemic and the associated disruptions to business, the American multinational delivery services company also announced a cost-cutting plan to combat the flu-like virus.  

Despite the rapidly spreading virus, FedEx topped analysts’ estimates for revenue in its earnings report for the recent quarter. According to the company, global businesses resorted to FedEx’s international express plane delivery option to minimize disruptions in supply chains during the Coronavirus crisis.

FedEx Climbed 5% In The Stock Market In Extended Trading On Tuesday

In extended trading on Tuesday, FedEx was reported to have climbed 5% in the stock market following the announcement. The company lost 0.5% of the gain later in the day and stabilized around £80.50 per share.

On a year to date basis, FedEx has lost around 40% in the stock market in 2020 so far. Its performance in 2020 wasn’t reported any better either with an annual loss of around 5%.

In the fiscal 3^rd quarter, FedEx recorded £316 million in adjusted net income that marked a 53.5% decline as compared to the same quarter last year. At just under £15 billion, its revenue printed a 3% gain as compared to a year ago. In terms of earnings per share, FedEx posted £1.20 per share in Q3 that came in line with the experts’ forecast, according to Refinitiv. Analysts, however, had estimated a lower £14.4 billion in revenue.

With Coronavirus weighing heavily on its financial performance, CFO Alan Graf of FedEx declared in his comment on Tuesday that the company has submitted a formal request to the White House for liquidity support.

FedEx Shareholders Haven’t Earned Anything In The Last 15 Years

In order to minimize the fast transmission of Coronavirus, governments from across the globe are recommending citizens to stay at home unless absolutely necessary. As per the experts, such restrictions are likely to fuel e-commerce spending that may translate into greater demand and business for FedEx in the upcoming months.

The company, however, remains uncertain and withdrew the profit guidance that it gave earlier.

Gullane Capital’s analyst, Trip Miller, highlighted on Tuesday that FedEx is trading near the same level in the stock market as it did some 15 years ago. As per Miller:

“The top 5 executives, plus the board, have made £740 million over the last 15 years, while the shareholders have made nothing”.