What You Need To Know Ahead of FedEx's Earnings Report Thursday

FedEx (FDX) is set to report third-quarter earnings for its 2024 fiscal year after the bell on Thursday following a tough stretch for the package delivery giant amid weakened demand.

In December, FedEx had reported results for the second quarter that missed estimates as it faced "volatile macroeconomic conditions" and lowered its guidance for the second consecutive quarter, leading to a single-day drop of 12% in its stock price after releasing results.

For the third quarter, analysts expect FedEx to post revenue of $22.01 billion, in a decline from the prior quarter and year-ago period, according to estimates compiled by Visible Alpha. The company is anticipated to post net income of $867.6 million and diluted earnings per share (EPS) of $3.46, down from the prior quarter but up from the same period a year earlier.

During the company’s second-quarter earnings call in December, FedEx warned its revenue could “continue to be pressured" by conditions "negatively affecting customer demand for our services across our transportation companies.”

Key Metric: Average Daily Volume

FedEx has reported nine straight quarters of year-over-year declines in average daily volume (ADV) of FedEx Express packages handled in the U.S. Another key metric to watch is revenue, as FedEx's revenue and ADV soared to record highs during the pandemic but have been sinking or growing more slowly over the last several quarters.

The company has been working to adjust to a slowdown in revenue following the pandemic boom. In its second-quarter earnings report, FedEx adjusted its guidance for the rest of 2024, projecting full-year sales to fall by a low-single-digit percentage, rather than the flat growth it previously anticipated.

FedEx competitor United Parcel Service (UPS) has also struggled with declining shipping demand in recent quarters, as well as with integrating changes to its business related to the contract agreement it reached with the Teamsters union last summer, averting a strike by more than 300,000 UPS employees.

Business Spotlight: Restructuring Effort

FedEx has had a mixed year since announcing a plan in April 2023 to restructure and cut about $4 billion in costs by 2025.

The plan, set to be complete in June, includes bringing FedEx Ground, Express, and Services all under the Federal Express Corp. umbrella, while still operating FedEx Freight as a separate business. Investors will likely be looking for updates on how that process is going, and what the long-term impacts could be.

A reduction in the company’s headcount of about 25,000 employees worldwide was also part of the cost-cutting effort.

FedEx shares gained 1.3% to close Wednesday at $259.99, and the stock was slightly higher in early trading Thursday. Through Wednesday, FedEx shares had gained about 18% over the past 12 months.

UPDATE—March 21, 2024: This article has been updated after initial publication to include the latest estimates from analysts and recent share price information.