Shares of FedEx Corp. (FDX)  have jumped more than 5% so far today after the company preannounced fiscal first-quarter earnings, which topped Wall Street expectations.

The package-delivery major said that it expects to post earnings of 58 cents per share, which is well above its guidance of 30 cents to 45 cents as well as the Zacks Consensus Estimate of 43 cents per share. The company reported earnings of $1.23 per share in the year-ago quarter.

The Memphis, TN-based company also stated that fiscal second-quarter earnings is expected to range between 65 cents and 95 cents per share, which is in line with the Zacks Consensus Estimate of 71 cents per share derived from 15 covering analysts. The guidance is still well below the year-ago earnings of $1.58 per share.

FedEx attributed the better-than-expected first quarter earnings to improved International Priority [IP] shipping volumes and management’s cost cutting efforts. The IP service generated revenues of nearly $7 billion and contributed about 19.6% towards total revenue during fiscal 2009.

However, the company added that revenue per shipment dipped year over year in each of the transportation segments amid a competitive pricing environment coupled with significant overcapacity in less-than-truckload [LTL] freight market.  The company, which competes with United Parcel Service Inc. (UPS), also said that the second quarter guidance incorporates the current outlook on fuel prices and a modest recovery in global economic conditions.

Meanwhile, the Zacks Consensus Estimate on the company’s earnings for the fiscal year ending May 2010 currently stands at $2.69 per share, which has edged down a penny over the past month. However, the most accurate estimate is more bullish at $2.87 per share.

Separately, the company stated that the U.S. Internal Revenue Service plans to assess $14 million in taxes and penalties, plus interest, on the company to cover 2002 federal employment and withholding taxes for independent contractors working for the FedEx Home Delivery division. The company said that it plans to contest the findings of the audit.

FedEx is a global transportation and logistics enterprise that offers customers a one-stop source for global shipping, logistics and supply chain solutions. Services offered by FedEx companies include worldwide express delivery, ground small-parcel delivery, LTL freight delivery and global logistics, supply chain management and electronic commerce solutions.

Shares of FedEx have more than doubled since their low levels in March this year, and have outperformed both UPS and S&P 500 index. The company is scheduled to report full results for the fiscal first quarter on Sept. 17 next week.

We currently have a Neutral recommendation on the stock.

Zacks Investment Research
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