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FedEx share price: 4 things to watch for in Q3 results

There are four important factors that could affect FedEx's Q3 earnings report.

FedEx share price will be closely watched when the freight shipping company releases its third quarter (Q3) earnings report. Here are four questions that could impact FedEx’s revenue report.

Will FedEx's revenue and earnings per share rise?

Fed Ex’s revenue is expected to be $17.68 billion, an increase of 7% from a year ago, according to Zack's Equity Research. While the company’s revenue may surge, FedEx’s earnings per share may rise, FedEx’s earnings per share may fall, as Zack's Equity Research noted. FedEx's earnings per share are predicted to be $3.10, a decrease of 16%.

During the corporation’s Q2 results in December 2018, Alan B. Graf, Jr., the company’s executive vice president, explained that the global economic slowdown affected FedEx’s Q3 earnings outlook.

‘Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term. These trends, coupled with the change in service mix at FedEx Express, are negatively impacting the segment’s financial results. We remain committed to actively managing costs with a heightened focus on increasing efficiency across the organization', said Graf.

Will the US-China trade war continue to impact FedEx's earnings?

The US-China trade war has negatively impacted FedEx’s earnings as the corporation conducts business in China. The corporation’s managers noted during a recent conference call that ‘continued tariff and trade concerns and uncertainty in Asia are impacting our business there. We continue to work with our customers as they re-evaluate their supply chain.’

Chief executive officer, (CEO), Fred Smith, spoke out against the tariffs last autumn. Smith also noted that the unpredictability of the issue would impact FedEx’s earnings.

‘The uncertainty around the issue and the potential for additional tariffs is affecting the market, and we're beginning to see some of the economic activity in China starting to moderate as a result of that,’ said Smith.

Will Amazon Air be able to compete with FedEx's profits?

FedEx's Q3 profits could be affected as the company faces new competition from Amazon. The e-commerce giant is going to deliver more of its own goods with an expansion of its ‘Amazon Air’ cargo plane fleet. Amazon delivering its own goods to customers and bypassing FedEx could mean that the company loses a prominent client for transporting products.

Could a new hire help FedEx profits?

FedEx profits could be impacted by the Don Colleran, the new head of FedEx Express, a subsidiary of FedEx Co. could impact FedEx’s Q3 earnings.

‘Don has the depth of talent and global experience to lead the FedEx Express organization. With his commercial focus and global mind set, he is the right choice to execute our key strategies and deliver for our customers, team members and shareholders,’ said outgoing CEO of FedEx Express, Raj Subramaniam.

Colleran’s takeover of the Express unit may turn around FedEx’s sluggish global sales. Investors will be watching to see how these international factors and new competition will affect FedEx’s Q3 results.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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