FedEx Corp, the U.S. delivery firm, exceeded expectations in its latest quarterly earnings report, with higher profits and revenue. However, despite these positive results, the company’s shares declined by 4.1%, as investors expressed concern about FedEx’s growth potential after the pandemic.

Following the release of its fiscal 2022 earnings forecast, FedEx’s stock dropped to $291.38 in extended trading. The company expects to earn between $18.90 and $19.90 per share, excluding certain items, which is lower than analysts’ average estimate of $20.37.

FedEx has witnessed significant growth in its stock value since March 2020, experiencing a rise of around 150%. This surge can be attributed to the increased demand for e-commerce services during the pandemic.

During a conference call, CEO Fred Smith expressed confidence in FedEx’s future prospects. However, he acknowledged the challenge of finding an adequate number of workers, which is impacting the company’s operations.

In the fiscal fourth quarter, FedEx’s adjusted net income rose to $1.36 billion, or $5.01 per share, compared to $663 million, or $2.53 per share, in the previous year. This increase in profit can be credited to higher fees for e-commerce services and cost savings resulting from strong volumes.

The company also experienced a significant boost in revenue, with a 30% rise to $22.6 billion. Analysts had predicted fourth-quarter earnings of $4.99 per share and revenue of $21.5 billion.

Both FedEx and its competitor, United Parcel Service (UPS), have implemented rate increases and added surcharges to accommodate the surge in package deliveries. However, investors are now interested in how these companies will continue to generate profits from online retail as the pandemic subsides. Additionally, they are anticipating a strong rebound in overnight business shipments as employees return to offices.

According to data from Convey Inc, FedEx ranks behind UPS and the U.S. Postal Service in terms of on-time deliveries. To alleviate pressure on its network, FedEx recently suspended freight shipping for approximately 1,400 customers. This was necessary as the company’s network has operated at near full capacity for most of the pandemic.

In summary, while FedEx has reported growth in profit and revenue, concerns about future growth prospects have caused a decline in its stock price. As the pandemic situation improves, investors are keen to see how the company will continue to generate profits from e-commerce services and if it can regain its strong position in overnight business shipments.

Useful links:
1. FedEx Official Website
2. United Parcel Service (UPS) Official Website