FedEx Net Income Plummeted 70 Percent to $558 Million

FedEx Corp. (FDX) reported on Thursday that its Q4 fiscal 2022 revenue rose 8% on an annual basis to reach $24.4 billion. The company's operating income inched up to $1.92 billion, with GAAP net income plunging as much as 70% to $558 million or $2.13 diluted earnings per share. Adjusted earnings in fiscal Q4 that ended May 31, however, jumped to $6.87 a share – in line with consensus forecast.

FedEx Ground operating results declined primarily due to higher self-insurance accruals and increased purchased transportation and wage rates. These costs were partially offset by higher revenue per package, including increased fuel surcharges.

FedEx forecast adjusted earnings for this fiscal year of between $22.50 and $24.50 a share. That’s still higher at the range’s midpoint than the current consensus forecast. FedEx reiterated its full year guidance in March, orienting investors to earnings between $20.50 to $21.50 per share, following a modestly weaker-than-expected fiscal Q3.

Apparently FDX has had a very tough comparison against the May '21 quarter, where revenue grew 30% YoY and EPS grew a whopping 98%, respectively. (May '20 saw -3% rev growth, -50% EPS growth, respectively).

Why does FDX earnings mean much more than just another financial report? FedEx is dubbed a “macroeconomic wobbler” or a leading economic indicator due to reflection of overall business confidence in the amount and frequency of various shippings, therefore its overtly weak numbers bring even greater concern about the risks pertaining to recession.

FedEx stock gained momentum last week on the back of a few interesting developments, including a 50%+ dividend hike. Yesterday, FedEx stock increased more than 3.5% in the after-hours trading following the earnings announcement, however, the impending correction looks more than likely given their muted character.