After the closing bell yesterday, transport bellwether FedEx (FDX – Free Report) reported robust 2018 third-quarter earnings results. The courier company outpaced the Zacks Consensus Estimate on both the top and bottom lines and lifted its full-year earnings guidance.
Earnings per share came in at $3.72, way above the Zacks Consensus Estimate of $3.08 and up from the year-ago earnings of $2.30. Revenues rose 10% year over year to $16.53 billion and edged past the estimate of $16.18 billion. Solid results were driven by record traffic between Thanksgiving and Christmas because of the increase in delivery for online shoppers.
FedEx raised its fiscal 2018 earnings per share guidance to $15.00-$15.40 from $12.70-$13.30 driven by foreign tax benefits from the international corporate structure, the benefits of the U.S. tax reform and improved operating performance. The new range is much higher than the Zacks Consensus Estimate of $13.51.
Following the solid results, FDX shares rose nearly 4% in aftermarket hours on elevated volume. FedEx carries a Rank #2 (Buy) and a VGM Score of A. It falls under a top-ranked Zacks industry (top 37%), suggesting its continued outperformance.
ETFs in Focus
The solid FedEx report is expected to benefit transport ETFs iShares Dow Jones Transportation Average Fund (IYT – Free Report) , SPDR S&P Transportation ETF (XTN – Free Report) and First Trust Nasdaq Transportation ETF (FTXR – Free Report). All these funds have a Zacks ETF Rank #3 (Hold).
IYT
The ETF tracks the Dow Jones Transportation Average Index, giving investors exposure to the small basket of 20 securities. Out of these, FedEx occupies the top position in the basket with 14.6% of the assets. Within the transportation sector, air freight and logistics takes the top spot with 29.9% share in the basket while railroads (24.7%), trucking (19.5%) and airlines (19.4%) round off the next three. The fund has accumulated nearly $865.9 million in AUM while it sees a good trading volume of around 234,000 shares a day. It charges 44 bps in fees per year and has gained 0.9% in the year-to-date time frame.
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