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FedEx Earnings Preview: All About Oil and the Economy

FEDEX (FDX)

The company that redefined package shipping and brought over-night delivery to the masses. Also offers e-commerce and supply chain management services. More than 290,000 employees and contractors doing business in 220 countries.

Reports Q4 earnings Wednesday 6/18 at approx. 745a ET. Conference call at 830a ET.

Paul Jespersen Chavez maneuvers his cart as he makes deliveries along his route in Portland, Ore.
Rick Bowmer
Paul Jespersen Chavez maneuvers his cart as he makes deliveries along his route in Portland, Ore.

WHAT WILL MOVE THE STOCK:

FUEL, ECONOMIC WORRIES - On May 9th, FedEx cut its profit guidance due to higher fuel prices and a weaker economy. Specifically, the company trimmed its outlook to $1.45 to $1.50 per share from $1.60 to $1.80 per share. Trouble is, oil has continued to rise since then. What is FedEx's plan for dealing with higher fuel prices? What is FedEx's economic outlook? Does the shipper see any improvement since May?

PRICING POWER - Can FedEx pass increased costs on to customers without killing demand? Are customers shifting to cheaper shipping options (2nd day air, FedEx Ground) to save money? Are customers taking their business elsewhere?

COMPARISON TO COMPETITORS - Any change in FedEx's market share? Any signs that FedEx is managing higher fuel costs better (or worse) than its competitors like UPS and DHL?

KINKO'S => FEDEX OFFICE COSTS $891 MILLION - This shouldn't move the stock, but it's worth noting nevertheless. On June 2, FedEx said it is taking a one-time $891 million charge to change the name of its Kinko's unit to FedEx Office. Will analysts exclude this charge when comparing FedEx's results to their estimates? Almost certainly.

ESTIMATES:

Q4 EPS down 23% to $1.47, revenues up 5% to $9.604 billion

Q1 EPS down 20% to $1.27, revenues up 6% to $9.770 billion

FY 09 EPS down 12% to $5.84, revenues up 7% to $37.704 billion

Source: Thomson Reuters

Year-ago actuals: Q4 EPS $1.90, Rev. $9.151 billion

*All estimates are current as of 6/17 and subject to change.*

FACTOIDS:

ANALYSTS TOE THE LINE - Wall Street analysts aren't straying from FedEx's guidance: all eleven who follow FedEx are forecasting Q4 earnings within the company's $1.45 to $1.50 per share earnings range.