Why FedEx Corporation (NYSE: FDX) stock is going gangbusters today

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FedEx Corporation (NYSE: FDX) stock rose over 12.04% in the pre-market session of July 1st, 2020 (Source: Google finance) post better than projected results for the fourth quarter of FY 20. FedEx has not provided an earnings forecast for fiscal 2021 due to the e uncertainty. The surging e-commerce sales from the large customers led to significant increase in FedEx volume in Q4 and a sizable mix shift from commercial B2B to Home Delivery/B2C volume. In Q4, FedEx total U.S. domestic residential volume increased to 72% versus 56% a year ago.

Meanwhile, during the fourth quarter, the company took several actions to increase liquidity and strengthen the financial position. In March, the company had extended the $1.5 billion 364-day credit agreement, along with the $2 billion five-year credit agreement. In April, the company had issued $3 billion of senior unsecured debt and used the proceeds in part for the repayment of the borrowings under the credit facilities and commercial paper program. In May, the company had amended the credit facilities to provide additional financial flexibility through the end of fiscal 2021, due to the current environment. The company ended the fiscal year with $4.9 billion in cash and cash equivalents and with $3.5 billion available under the credit facilities.

FDX in the fourth quarter of FY 20 has reported the adjusted earnings per share of $2.53, beating the analysts’ estimates for the adjusted earnings per share of $1.42, according to Zacks Consensus Estimate. The company had reported the adjusted revenue of $17.36 billion in the fourth quarter of FY 20, beating the analysts’ estimates for revenue by 7.70%.

Going forward, FedEx Ground plans to complete the integration of FedEx SmartPost packages into standard FedEx Ground operations by peak season. The company expects TNT Express integration expenses to total approximately $1.7 billion through the completion of the physical network integration in fiscal 2022, out of which $175 million is anticipated to be incurred this fiscal year. Capital expenditures for fiscal 2021 are projected to be approximately $4.9 billion, a $1 billion year-over-year decline, mainly due to reduced vehicle replacement spending and delayed facility investments. The company does not expects in making contributions to its tax-qualified U.S. domestic pension plans during fiscal 2021, after the voluntary contributions of $1 billion during each of the last two fiscal years. Due to delays caused by COVID-19, the company is now planning to complete the final phase of the air network integration early in calendar year 2022.

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