2023-12-21 23:12:52
Package shipping company FedEx reported lower-than-expected financial results for the second quarter. (Photo: Maxime Johnson)
What to do with FedEx, Corus Entertainment and BCE securities? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
FedEx (FDX, US$246.25): results below forecasts which push the stock down 12%
The package transport company FedEx revealed financial results lower than expected for the second quarter of its 2024 fiscal year, ended November 30, and the stock reacted poorly on the New York Stock Exchange, losing US$33.75, or 12.05%, to $246.25 on Wednesday.
For the quarter, FedEx reported earnings per share of US$3.99, while analysts’ consensus was for a performance of US$4.19. Fadi Chamoun, analyst at BMO Capital Markets, was a little more optimistic at US$4.28.
“The Express delivery services division caused the hiccups, with adjusted earnings before interest and taxes (EBIT) of 178 million US dollars (M$), while we expected $326M, compared to $369M for the consensus” , writes the BMO analyst. The division’s profit margin was only 1.7%, while the analyst and consensus expected figures of 3.2% and 3.4% respectively.
The company says it has been affected by lower volumes, lower fuel surcharges and customer preferences for low-cost services with lower profit margins.
The latter, however, highlights the good performance of the FedEx Ground division, with an EBIT of $936M, right on its forecast and higher than the consensus figure of $900M. This is an increase of 57% year-on-year. The division’s profit margin of 10.8% is relatively in line with forecasts.
Less-than-truckload and freight transportation services offered a “solid performance” according to the analyst, with an EBIT of $487 million, with a profit margin of 20.6%.
“The company reiterated its guidance for the full financial year 2024, with earnings per share forecast between US$17 and US$18.50. Share repurchases totaled US$1 billion (B) since the start of the fiscal year, which helped boost earnings per share by $0.05. The company remains determined to repurchase $2 billion worth of shares by the end of the financial year,” adds the analyst.
Fadi Chamoun maintains his recommendation to hold FedEx shares and his one-year target price of US$290.
Denis Lalonde
Corus Entertainment (CJR.B: $0.76): revenue decline expected to continue
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