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FedEx Corp FDX

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FedEx Delivers Excellent Fiscal Q1 Results on Surging B2C Demand, but Shares Looking Rich

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

Global integrator FedEx’s fiscal first-quarter 2021 (ended August) revenue jumped a very impressive 13% year over year; in stark contrast to the 2.5% decline posted last quarter, and well ahead of our forecast and consensus estimates. In short, the coronavirus pandemic has accelerated the broader shift to e-commerce sales, likely pulling forward years of B2C package growth and driving a massive spike in residential deliveries for ground. Also, Express’ international priority volumes saw a major lift from tight market capacity (limited commercial-airline belly space), which is boosting demand for FedEx’s airlift assets. Overall, these factors, along with nice yield gains at ground and freight, handily offset lower B2B package activity and lost Amazon revenue that was shed last year.

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Company Profile

Business Description

FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2019, FedEx derived 54% of revenue from its express division, 29% from ground, and 11% from freight; its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth- largest global parcel-delivery provider.

942 South Shady Grove Road
Memphis, TN, 38120
T +1 901 818-7500
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Aug 31, 2020
Fiscal Year End May 31, 2021
Stock Type Cyclical
Employees 506,000