Via Zerohedge

After several consecutive quarters of missing the top and bottom line, the global logistics carrier finally had a good quarter… just as the world is grinding to a halt.

FedEx reported adjusted Q3 EPS that beat the average analyst estimate, which was great, but not so great is that the company suspended its outlook on uncertainty related to coronavirus pandemic.

  • Q3 adjusted EPS $1.41 vs. $3.03 y/y, estimate $1.27
  • Q3 revenue $17.5 billion, estimate $16.82 billion (range $16.07 billion to $17.38 billion)
  • Q3 adjusted operating margin 2.8% vs. 5.80% y/y, estimate 3.36%

Despite beating sharply lowered expectations, operating results declined due to weaker global economic conditions including the impact of the coronavirus, higher self-insurance accruals, an unfavorable variable incentive compensation comparison, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to lower-yielding services and a more competitive pricing environment

However, the big surprise – or perhaps not – in the earnings report was that FedEx was joining so many of its peers in pulling guidance as nobody has a clue anymore what the future holds: “We are suspending our fiscal 2020 earnings forecast for our consolidated and segment results due to the  uncertainty caused by the coronavirus pandemic,” CFO Alan Graf said in statement

“To mitigate these near-term headwinds and position the company for future earnings growth, we are attacking costs throughout the company by managing capacity, retiring our oldest and least- efficient aircraft, integrating TNT Express, and lowering our residential delivery costs by having FedEx Ground deliver FedEx SmartPost and certain day-definite FedEx Express packages.”

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As a result, while algos initially responded to the big beat sending the stock higher, they have since realized that what happened last quarter is absolutely meaningless in a world where the economy has ground to a halt, and promptly dragged the stock to unchanged.