FedEx Misses Q3 Earnings Estimates, Beats on Revenues, Tweaks View

FedEx Corporation (FDX Quick QuoteFDX – Free Report) reported mixed third-quarter fiscal 2025 results wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same. Quarterly earnings (excluding 75 cents from non-recurring items) of $4.51 per share missed the Zacks Consensus Estimate of $4.65. However, the bottom line improved 16.8% year over year.

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Revenues of $22.2 billion came ahead of the Zacks Consensus Estimate of $21.8 billion and improved 2.1% from the year-ago fiscal quarter’s reported figure.

Quarterly results benefited from cost reduction benefits from DRIVE program initiatives, higher base yield at each transportation segment, and higher volume at Federal Express.

Operating income, on a reported basis, increased 4% to $1.29 billion from the year-ago fiscal quarter’s reported number. Operating margin rose to 5.8% from 5.7% in the year-ago reported quarter.

Operating expenses (reported basis) increased 2% to $20.8 billion.

Segmental Performance During the Quarter

Federal Express and FedEx Freight now represent the company’s major service lines and constitute its reportable segments. Further, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment.

FedEx Express segment’s revenues grew 3% year over year to $19.1 billion. The segment was aided by cost reduction benefits from DRIVE, higher base yield, and increased U.S. and international export volume. These factors were partially offset by higher wage and purchased transportation rates, as well as the expiration of the U.S. Postal Service contract.

FedEx Freight revenues fell 5% from the year-ago fiscal quarter’s reported figure to $2.08 billion. FedEx Freight segment was hurt by lower fuel surcharges, reduced weight per shipment, and fewer shipments, partially offset by higher base yield. Our estimate is pegged at $2.24 billion.

Average daily shipments fell 5% year over year. Capital expenditures for the reported quarter were $997 million.

Liquidity

FedEx exited third-quarter fiscal 2025 with cash and cash equivalents of $5.14 billion compared with $5.02 billion at the end of the prior quarter. Long-term debt (less current portion) was $19.5 billion compared with $19.4 billion at the end of the prior quarter.

FedEx completed its $2.5 billion fiscal 2025 share repurchase plan with $0.5 billion in share repurchases through open market transactions during the reported quarter. Almost 1.8 million shares were repurchased, with the decrease in outstanding shares aiding third-quarter results by 12 cents per share.

As of Feb. 28, 2025, FDX had $2.6 billion available for repurchases under its 2024 stock repurchase authorization.

Fiscal 2025 Outlook

FDX has updated its full-year guidance. FDX now expects revenues to be flat to slightly down year over year compared with the prior view of flat year over year. 

Earnings per share (EPS) is now expected to be in the range of 15.15-$15.75 (prior view: $16.45 to $17.45) before the MTM retirement plans accounting adjustments and $18.00 to $18.60 (prior view: $19.00 to $20.00) after excluding costs related to business optimization initiatives, international regulatory and legacy FedEx Ground legal matters, and the planned spin-off of FedEx Freight.

FDX now anticipates capital spending of $4.9 billion (prior view: $5.2 billion) in fiscal 2025.

Effective tax rate is still estimated to be 24%.

Zacks Rank of FDX Stock

FedEx currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q4 Performances of Other Transportation Companies

Delta Air Lines

Delta Air Lines (DAL Quick QuoteDAL – Free Report) reported fourth-quarter 2024 earnings (excluding 56 cents from non-recurring items) of $1.85 per share, which surpassed the Zacks Consensus Estimate of $1.76. Earnings increased 44.5% on a year-over-year basis due to low fuel costs.

DAL’s revenues of $15.56 billion surpassed the Zacks Consensus Estimate of $14.99 billion and increased 9.4% on a year-over-year basis, driven by strong holiday travel demand. Adjusted operating revenues (excluding third-party refinery sales) totaled $14.44 billion, up 5.7% year over year. Passenger revenues, which accounted for 82.4% of total revenues, increased 5% year over year at $12.82 billion.

J.B. Hunt Transport Services

J.B. Hunt Transport Services (JBHT Quick QuoteJBHT – Free Report) reported fourth-quarter 2024 earnings per share of $1.53, which fell short of the Zacks Consensus Estimate of $1.62. However, the bottom line increased 4.1% on a year-over-year basis.  

JBHT’s total operating revenues of $3.15 billion narrowly beat the Zacks Consensus Estimate of $3.13 billion but declined 4.8% year over year. The decline was mainly due to lower fuel surcharge revenues and yield pressure in its Intermodal segment.

JBHT’s fourth-quarter 2024 operating revenues of $2.78 billion, excluding fuel surcharge revenue, decreased 2% from the year-ago reported quarter. Total operating income for the reported quarter increased 2% year over year to $207 million.

Alaska Air Group

Alaska Air Group, Inc. (ALK Quick QuoteALK – Free Report) reported solid fourth-quarter 2024results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Quarterly earnings per share of 97 cents outpaced the Zacks Consensus Estimate of 47 cents and improved more than 100% on a year-over-year basis. The reported figure exceeded the guided range of 40-50 cents.

ALK’s bottom line benefitted from solid revenue growth, cost and operational performance throughout the quarter and holiday travel periods. ALK also benefitted from a renegotiation of certain interest payments and favorability in its fourth-quarter tax rate.

ALK’s operating revenues of $3.53 billion beat the Zacks Consensus Estimate of $3.51 billion. The top line jumped 38.4% year over year, with passenger revenues accounting for 89.9% of the top line and increasing 37% owing to continued recovery in air-travel demand.