Credit: Shutterstock photoWe expect FedEx Corporation ( FDX ) - a leading player in the field of global express delivery services - to beat expectations when it reports second-quarter fiscal 2015 results on Dec 17, 2014, before the opening bell.
Why a Likely Positive Surprise?
Our proven model shows that FedEx is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +4.13%. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank : FedEx has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of FedEx's Zacks Rank #2 and +4.13% ESP makes us confident of an earnings beat in the second quarter of fiscal 2015.
What is Driving the Better-than-Expected Earnings?
We expect FedEx, which has reported better-than-expected earnings in the last two consecutive quarters, to continue to perform well in the second quarter as well. All segments of the company should perform well. Falling fuel prices are particularly expected to aid results in the quarter.
The company expects rising e-commerce spending to generate strong business in ground shipments. Moreover, gradual signs of improvement in the economy should also boost FedEx's quarterly numbers. In addition, the company's focus on buybacks to enhance shareholder value is also encouraging. This should significantly aid the bottom line. The company is presently concentrating on network realignment to match the current demand level, and ramping up its performance to gain competitive edge over the likes of United Parcel Service, Inc. ( UPS ).
Other Stocks to Consider
FedEx is not the only firm looking up this earnings season. We also see likely earnings beats coming from these companies:
Atlas Air Worldwide Holdings ( AAWW ), with an earnings ESP of +5.63% and a Zacks Rank #1 (Strong Buy).
Radiant Logistics ( RLGT ), with an earnings ESP of +50.00% and a Zacks Rank #3 (Hold).
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FEDEX CORP (FDX): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
