FedEx profit tops Wall street estimates amid trade war worries

FedEx Corp reported fourth-quarter profit that beat Wall Street estimates on Tuesday, as revenues and operating margins increased in each of the company's operating units. Shares of the Memphis-based package delivery company rose marginally in after-market trading, after suffering their worst sell-off in two months in regular trade on worries over the US-China trade war.
FedEx is often considered a bellwether for the US economy, along with its main rival United Parcel Service Inc. FedEx and companies in the industrial sector faced the brunt of trade tensions on Tuesday after China vowed to retaliate against US President Donald Trump's threat to impose a 10 percent tariff on $200 billion of Chinese goods. "I have never been so optimistic and so sure of our strategy and our ability to deliver an exciting future," FedEx Chief Executive Frederick Smith said on a conference call.
He spoke after the company reported a fourth-quarter profit, excluding items, of $5.91 per share - 20 cents per share better than analysts' average estimate, according to Thomson Reuters I/B/E/S. Revenue matched Wall Street's target, rising 10.2 percent to $17.3 billion. The results were buoyed by rate increases, increased package volume and more efficient operations, including airlines and facilities, analysts said.
"We do remain concerned, however, about threats that manage the free flow of goods among countries. Trade is a two-way street, and FedEx supports lowering trade barriers for our customers, not raising them," Smith said, echoing comments he made on Friday.
FedEx has been ahead of United Parcel Service in making massive network investments to handle the growing number of deliveries for online purchases, and investors have been eager to see returns on that investment. Those investments paid off in FedEx's fourth quarter, said Trip Miller, managing director at Memphis-based hedge fund Gullane Capital Partners, who also personally holds FedEx shares.
Shares of both FedEx and UPS closed down about 2 percent on Tuesday. FedEx shares clawed back 0.3 percent at $259.05 in extended trading. Amazon.com Inc's rollout on Tuesday of package delivery lockers for apartment dwellers also may have weighed on FedEx and UPS shares, an analyst said. FedEx forecast fiscal 2019 revenue growth of about 9 percent, while analysts were expecting about 6 percent growth. The company said it expects fiscal 2019 earnings per share of $17.00 to $17.60, excluding some items. Analysts forecast $17.47 a share.