FedEx (NYSE: $FDX) released its Q1 fiscal 2025 results to a negative market reception on Thursday after markets closed. Let us look at FedEx’s latest financial results.
FedEx Misses Estimates In Q1 Results
FedEx reported an adjusted EPS of $3.60, missing estimates of $4.86, while the reported revenue of $21.6 billion missed estimates of $21.96 billion. In the same period last year, FedEx reported revenue of $21.7 billion, while the adjusted EPS came in at $4.55.
FedEx attributed the disappointing first-quarter results to a mix shift that led to a fall in demand for priority services, ramped up demand for deferred services, and constrained yield growth.
The company also attributed the higher operating costs and one fewer operating days to the depressed Q1 results. However, the negative impact was partially offset by their DRIVE initiatives.
Other Financial Highlights
Federal Express, which now includes FedEx Ground and FedEx Services, saw its margins decline to 5.2% from 7.1% the previous year. Meanwhile, FedEx saw margins drop to 5% from 6.8% the previous year.
In the first quarter, FedEx reported it had completed a $1 billion share buyback via an accelerated share repurchase. It also bought back $1.5 billion worth of common stock, bringing the shares bought back to $2.5 billion. At the end of the quarter, FedEx has $4.1 billion remaining under its current share buyback authorization. FedEx ended the quarter with $5.9 billion cash on hand.
FedEx Narrows Its Fiscal 2025 Outlook
FedEx announced it now expects an adjusted EPS of $20 to $21, down from the previous forecast of $20 to $22. It now expects revenue to grow by a low single-digit year over year from its previous forecast of low to mid-single digit.
It reaffirmed its forecast of $2.2 billion in permanent cost reductions from the DRIVE program. Additionally, it expects capital expenditure of $5.2 billion for the whole year, focusing on network optimization and efficiency improvements.
FedEx CFO John Dietrich stated that the company will “continue to manage our capital prudently, and remain committed to our plan to return $3.8 billion to stockholders this fiscal year.”
FedEx (FDX) Market Performance
Before the release of its Q1 results, Feder (FDX) stock had a great run in 2024, rising 18.75% year to date. In the past 12 months, the stock was up 20.16% as of Thursday’s closing price. Over the past month, the stock was up 4.2% compared to the 0.2% gain of the S&P 500.
Following the revenue and earnings miss in Q1, FedEx stock was down 13.13% during pre-market trading. FedEx stock is above both the 50 and 200 DMAs of $293.34 and $267.52, respectively, as of Thursday’s closing price of $300.39.
Analysts are confident about FDX’s future, giving it an overall moderate buy rating. They forecast a wide price range, with a high of $359 and a low of $215. Their forecast of $322.67 is a 7.42% upside based on the last closing price.
Is Now The Time To Buy FedEx (FDX)?
According to a recent note from Barclays to its clients, FedEx’s recent results were amongst “the worst first quarter profitability outcomes outside of the 2009 recession.” FedEx lowered its full-year outlook and missed estimates, and the market reacted negatively.
One ray of hope for investors is the DRIVE program. Investors should closely monitor how the company executes its cost-saving plans. If successful, FDX could potentially be worth adding to your portfolio in the long term.
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