What’s the best way to make sure you meet or exceed investors’ expectations in this economy? Cost cut baby. FedEx shares are up nearly 4% in pre-market trading after announcing its latest annual profit forecast.
The shipping giant based out of Memphis announced earnings for the current fiscal year ending in May will sit in the $8.50 to $9 a share range. Investors cheered those numbers after comparing them to average estimates of $8.73.
“Fiscal 2014 was a good year for FedEx and we expect fiscal 2015 to be even better,” Chief Financial Officer Alan B. Graf said in the statement. I’d say.
As for fiscal fourth quarter results, FedEx announced a profit of $2.46 a share. That beat expectations of $2.36 a share. Revenue was also better than expected at $11.8 billion.
The boost to fourth quarter earnings and profit forecasts are a direct result of a cost reduction plan instituted by FedEx in October 2012. Back then, FedEx unveiled a $1.7 billion plan to help reduce costs. Why? To combat the shift of customers moving away from expensive overnight shipping to slower and cheaper options.
FedEx also took a hit from the snow this past winter when it had to cut its forecast for fiscal 2014 back in March. Today’s results and forecasts show its recovering nicely, though.
Wall Street often keeps an eye on FedEx to get a gauge of how the whole economy is performing. The sheer amount of freight the company handles can tell investors a lot about what is going in the U.S. and around the world.