FedEx (FDX) reported better-than-expected fiscal third-quarter earnings as vaccine shipments ramp up. FedEx stock rose in late trade as it works toward a buy point.
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Earlier, XPO Logistics (XPO) takes a key step toward spinning off its logistics business, with XPO stock briefly breaking out before reversing lower amid the broad market sell-off.
Transportation and logistics firm XPO announced a new company, GXO Logistics, Thursday that will house its logistics business after a planned spinoff of that business. It also revealed a confidential Form 10 filing tied to the spinoff, calling the move a significant milestone. The three letters GXO stand for “game-changing opportunities” for customers, it said.
GXO will become the second largest contract logistics provider in the world, the company said.
XPO Logistics disclosed the proposed spinoff last December to unlock value. It will focus on less-than-truckload freight transportation after the separation, which is set to complete in the second half of 2021.
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FedEx Earnings
Estimates: Wall Street expected FedEx earnings to soar 128% to $3.21 as revenue grows 14% to $19.97 billion.
Results: FedEx earnings surged 146% to $3.47 a share. Revenue swelled 23% to $21.50 billion. That’s the third straight quarter of accelerating growth for both.
Outlook: FedEx sees fiscal 2021 EPS of $17.60 to $18.20 a share excluding a variety of items, including retirement plan accounting and TNT Express integration costs.
“We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future,” Chairman and CEO Fred Smith said in the FedEx earnings release.
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FedEx Stock, XPO Stock
FedEx stock rose 4% in extended trade. Shares closed off 0.9% to 263.51 in Thursday’s stock market trading. Its stock is forming a cup base with a 305.76 buy point after clearing the 50-day line, according to MarketSmith chart analysis. Archrival UPS was little changed late. UPS stock edged down 0.3% on Thursday after dipping below the 50-day line on Wednesday.
XPO stock fell 1.6% to 126.30 on Thursday. after rising intraday to 131.42, just topping a 128.67 buy point off a flat base or shallow cup base. FedEx stock and UPS have lagging RS lines, while XPO’s relative strength line is near the consolidation peak.
Like rival UPS (UPS), which beat Q4 views in February, FedEx could gain from coronavirus vaccine shipments and a holiday shipping season fueled by e-commerce volumes.
FedEx said March 1 it’s preparing for vaccine volumes to grow throughout the spring and summer, after the U.S. started distribution in December. It also began shipping the third approved vaccine, made by Johnson & Johnson (JNJ) and distributed by drug wholesaler McKesson (MCK).
“As manufacturers obtain approval to ship Covid-19 vaccines with greater temperature ranges and varying dosing allotments, we anticipate more of these packages moving to more places through our global network,” FedEx CEO Don Colleran said.
FedEx earnings have accelerated for two quarters, capped with a 92% gain in the second quarter. The pandemic lockdowns unleashed a flood of online shopping, which led to pricing gains across various segments for the shipping giant.
But margins for FedEx and UPS are under scrutiny as less-profitable residential volumes boom.
Last December, FedEx acquired e-commerce platform ShopRunner as Amazon.com (AMZN) grows its logistics and delivery business.
Amazon has become less of a customer and more of a rival to UPS and FedEx, which has reduced their relationship with the e-commerce giant.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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