Shipping company FedEx reported earnings this morning and failed to meet Wall Street earnings estimates. FedEx earned $500 million in revenues, or $1.57 earnings per share, in the second quarter of 2013. Analysts expected earnings of $1.64 per Thomson Reuters.
A major factor was that revenue at its biggest segment, express shipping, fell to $6.84 billion this quarter versus last year`s $6.86 billion. The unit has been decreasing as clients choose slower but cheaper delivery options (yup, guilty as charged). In response, FedEx has been revamping routes and trimming capacity to Asia and other international markets.
The news isn’t all bad though. Revenues and earnings were much higher than those of last quarter: $438 million in revenues and $1.39 in earnings. And revenue for ground shipping jumped 10 percent to $2.85 billion. And although the stock is down over 1% pre-market, overall the stock is up about 52% year to date (the S&P has risen about 25%).
FedEx is an important earnings report to watch because it’s seen as a rough barometer for the rest of the economy – people need to buy things to ship them. I’ll be interested to see how the Q3 earnings do, since that will be the quarter with the omnipotent Christmas shopping/shipping season included.