FedEx (NYSE:FDX) disclosed a 3.3% slip in fiscal third-quarter profits on Thursday, but the economic bellwether’s rosy guidance exceeded Wall Street’s hopes.
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The Memphis-based shipping giant said it earned $231 million, or 73 cents a share, in the quarter ended Feb. 28, compared with a profit of $239 million, or 76 cents a share, a year earlier.
Excluding one-time items, it earned 81 cents a share, coming in a penny shy of the Street’s view.FedEx, which is seen as a gauge for economic growth, said its revenue increased 11% to $9.66 billion, surpassing consensus calls from analysts for $9.61 billion. Operating margin narrowed to 4.1% from 4.8%.
Average daily ground package volume climbed 6%, while freight revenue received an 8% bump to $1.12 billion. U.S. domestic average package volume inched up 2%.
“Continued growth in the global economy is driving solid revenue gains in our transportation businesses,” CEO Fred Smith said in a statement.
Looking ahead, FedEx forecasted EPS of $1.66 to $1.83 for the current quarter. Even the low end of that range would top forecasts for $1.65.
For its fiscal year, FedEx said it sees non-GAAP profits of $4.83 to $5 a share, which compares favorably with the Street’s view of $4.87.
“We expect strong demand for our services to boost our financial performance in our fourth quarter,” said Smith.
Shareholders cheered FedEx’s guidance and largely overlooked its EPS miss, bidding the company’s stock 5.05% higher to $89.59 ahead of Thursday’s open. Rival UPS (NYSE:UPS) gained 3.61% to $72.92.