FedEx (FDX) reported better-than-expected fiscal third-quarter earnings as vaccines rose. FedEx stock has risen in late trading as it works towards a buy point.
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Earlier, XPO Logistics (XPO) is taking an important step towards breaking down its logistics business, with XPO shares breaking out shortly thereafter before returning too little amid broad market sales.
The transport and logistics firm XPO on Thursday announced a new company, GXO Logistics, which will house its logistics business after a planned downsizing of the business. It also revealed a confidential Form 10 submission linked to the spin-off, which made the move an important milestone. The three letters GXO stand for ‘customers’ game-changing opportunities’.
GXO will become the second largest contract logistics provider in the world, the company said.
XPO Logistics announced the proposed spin-off last December to unlock value. After the separation, which was completed in the second half of 2021, it will focus on less than freight transport.
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FedEx earnings
EstimatesWall Street expects FedEx revenue to rise 128% to $ 3.21 as revenue grows 14% to $ 19.97 billion.
Results: FedEx earnings increased 146% to $ 3.47 per share. Revenue rose 23% to $ 21.50 billion. This is the third consecutive quarter of faster growth for both.
Prospects: FedEx sees a fiscal 2021 EPS of $ 17.60 to $ 18.20 per 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 in the foreseeable future,” said Fred Smith, Chairman and CEO, in the FedEx Revenue Statement.
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FedEx Stock, XPO Stock
FedEx share rose 4% in expanded trading. Shares closed 0.9% to 263.51 in the stock market. The stock forms a header base with a buying point of 305.76 after the 50-day line was cleared, according to the MarketSmith chart analysis. UPS’s archival change has changed little. UPS shares fell 0.3% on Thursday after falling below the 50-day low on Wednesday.
XPO share fell 1.6% to 126.30 on Thursday. after rising intraday to 131.42, it is just a 128.67 buying point on top of a flat base or shallow cup. FedEx shares and UPS have lagging RS lines, while XPO’s relative strength line is near the consolidation peak.
Like competitor UPS (UPS), which beat the Q4 view in February, FedEx could benefit from coronavirus vaccines and a holiday season fueled by e-commerce volumes.
FedEx said it was preparing for the growth of the vaccine on March 1 during spring and summer, after the U.S. began distributing in December. It also has the third approved vaccine, manufactured by Johnson & Johnson (JNJ) and distributed by drug wholesaler Mckesson (MCK).
“As manufacturers gain approval for shipping Covid-19 vaccines with larger temperature ranges and different doses, we expect more of these packages to move to more locations through our global network,” said FedEx CEO Don Colleran.
FedEx earnings accelerated for two quarters, up 92% in the second quarter. The closure of the pandemic unleashed a flood of online shopping, leading to price increases in various segments for the shipping giant.
But margins for FedEx and UPS are under scrutiny as less profitable residential volumes rise.
Last December, FedEx acquired the e-commerce platform ShopRunner as Amazon.com (AMZN) expands its logistics and delivery business.
Amazon has become less of a customer and has become a competitor of UPS and FedEx, which has reduced their relationship with the e-commerce giant.
Find Aparna Narayanan on Twitter @IBD_Aparna.
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