By Dhirendra Tripathi
Investing.com – FedEx stock (NYSE:FDX) jumped 6% in Friday’s premarket trading as higher shipping rates took the company’s fiscal second-quarter numbers well past analysts’ estimates.
A top-up of $5 billion in share buybacks and the company’s restoration of earlier, higher, revenue guidance were also adding to the gains in the stock.
FedEx said revenue per shipment was higher in the second quarter and that improved operating income, notwithstanding the challenges of a labor shortage.
A scarcity of labor and an 83% rise in fuel costs boosted overall expenditures by an estimated $470 million year over year in the three months through November. Adjusted operating margins were thus weaker by 0.3 percentage point at 7.1%. Total revenue was up 14% at $23.47 billion but net profit fell 15% to $1 billion.
The company said the buyback includes a $1.5-billion accelerated exercise that will be completed by end-May.
Excluding items, FedEx now expects full-year earnings per share of $21 at the center of its guidance range, as it had first forecast in June. FedEx had lowered that range to $19.75-$21 in its last quarterly update.
Sales at FedEx Express, the largest unit of the company, were up 12% on a combination of higher yields and volume.
Ground unit sales, usually the courier’s fastest-growing and most profitable, rose 13%, helped by a 9% increase in package prices.