FedEx Reports Q3 Revenue Growth Of ~10%, Expects Strong Earnings Growth In Q4

FedEx Corporation FDX reported third-quarter FY22 revenue growth of 9.8% year-over-year to $23.6 billion, beating the consensus of $23.44 billion.
Adjusted operating margin expanded to 6.2% from 4.9% in 3Q21. The adjusted operating income improved to $1.47 billion (+37% Y/Y) due to higher revenue per shipment and a net fuel benefit at all transportation segments.
Adjusted EPS improved to $4.59, compared to $3.47, while missing the consensus of $4.64.
FedEx Express's operating results increased, driven by higher yields, a net fuel benefit, and lower variable compensation expense.
FedEx Ground operating results declined primarily due to increased rates for purchased transportation and employee wages, network inefficiencies, and expansion-related costs.
FedEx Freight's operating income nearly tripled, driven by a continued focus on revenue quality and profitable growth. Revenue per shipment increased 19%, and average daily shipments grew 2% during the quarter, while the operating margin increased 850 basis points to 15%.
FDX expects strong earnings growth in Q4.
FY22 Outlook: FedEx expects EPS of $18.60 to $19.60, compared to the prior forecast of $18.25 to $19.25 per diluted share.
It expects an adjusted EPS of $20.50 to $21.50 vs. $20.61 consensus. Capital spending of $7 billion, compared to the prior forecast of $7.2 billion.
Price Action: FDX shares are trading lower by 2.21% at $222.94 during the post-market session on Thursday.

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