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Earnings Estimates Moving Higher for FedEx (FDX): Time to Buy?

FedEx (FDX) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

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This story originally appeared on Zacks

Investors might want to bet on FedEx (FDX), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

- Zacks

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this package delivery company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For FedEx, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

Current-Quarter Estimate Revisions

The company is expected to earn $4.76 per share for the current quarter, which represents a year-over-year change of +37.18%.

The Zacks Consensus Estimate for FedEx has increased 6.95% over the last 30 days, as five estimates have gone higher while one has gone lower.

Current-Year Estimate Revisions

The company is expected to earn $20.71 per share for the full year, which represents a change of +13.98% from the prior-year number.

The revisions trend for the current year also appears quite promising for FedEx, with nine estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 7.17%.

Favorable Zacks Rank

Thanks to promising estimate revisions, FedEx currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Investors have been betting on FedEx because of its solid estimate revisions, as evident from the stock's 6.6% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.



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