Summary of Key Points from the Conference Call Industry Overview: Global Logistics - **Trade Policy Instability**: The current trade policy landscape is characterized by significant instability, with potential conflicts in the Middle East affecting logistics and transshipment hubs. Multinationals and logistics partners are forced to adapt continuously [1][4] - **Q1 Volume Performance**: Strong Q1 volumes were reported, with ocean volumes increasing by 6% year-over-year (YoY) in April. However, there are concerns about potential risks to trade volumes in the second half of the year [1][3] - **Airfreight Revenue Growth**: The international airfreight industry is experiencing low single-digit revenue growth, with recent data indicating a slight decline in yields due to lower fuel surcharges [1][5] Key Metrics and Trends - **Global Trade Volumes**: Global trade volumes rose by 5.9% YoY in March, primarily driven by a 30% increase in US imports, likely due to demand pull forward ahead of tariff threats [2] - **Spot Rates**: Spot rates for ocean freight have spiked significantly, with the Shanghai Containerized Freight Index (SCFI) up by 41% and the World Container Index (WCI) up by 59% since mid-May [3] - **PMI Indicators**: Recent Purchasing Managers' Index (PMI) data shows a decline in China (-2.1 points to 48.3), while the US stabilized and Europe improved [2] Company-Specific Insights DSV - **Rating**: Outperform, Target Price (TP) DKK 1,650.00 - **Acquisition of DB Schenker**: DSV is expected to become the largest freight forwarder post-acquisition, with anticipated EPS of DKK 100+ by 2028 [9] DHL - **Rating**: Outperform, TP €43.00 - **Earnings Exposure**: Approximately 80% of EBIT is tied to e-commerce and world trade, with a significant portion coming from the Express division [10] Kuehne+Nagel - **Rating**: Market-Perform, TP CHF 190.00 - **Performance Issues**: The company has underperformed peers in volume growth, attributed to deep headcount reductions impacting commercial capabilities [11][12] A.P. Moller - Maersk - **Rating**: Underperform, TP DKK 9,350.00 - **Challenges in Container Shipping**: Spot rates are down approximately 40% year-to-date, with expectations of declining volumes and a challenging supply-demand balance [13] UPS - **Rating**: Outperform, TP $133.00 - **Cost Savings Initiatives**: UPS is targeting $3.5 billion in cost savings through restructuring, which includes significant workforce reductions [24] FedEx - **Rating**: Market-Perform, TP $249.00 - **Network Integration Risks**: The company faces challenges due to policy uncertainty and complex network integration, which may impact earnings [25] Investment Implications - **European Logistics**: DSV and DHL are rated as Outperform, while Kuehne+Nagel and Maersk are rated as Market-Perform and Underperform, respectively [8] - **North American Logistics**: UPS is rated as Outperform, while FedEx is rated as Market-Perform [8] Additional Considerations - **Geopolitical Risks**: Ongoing conflicts in the Middle East may complicate logistics and trade routes, particularly affecting the Strait of Hormuz and key ports like Jebel Ali [4] - **Market Sentiment**: There is a cautious outlook on companies like Kuehne+Nagel and CSX due to execution challenges and macroeconomic uncertainties [12][18] This summary encapsulates the critical insights and metrics from the conference call, highlighting the current state of the global logistics industry and specific company performances.

Group 1: Earnings Expectations - Q2 earnings for the S&P 500 index are expected to increase by +5% year-over-year, with revenues up by +3.9%, marking a significant deceleration from previous growth trends [1][6] - If the +5% earnings growth is realized, it will be the lowest growth rate since Q3 2023, which had a +4.3% growth rate [1] Group 2: Sector Performance - Since early April, Q2 earnings estimates have declined for 14 out of 16 Zacks sectors, with the most significant cuts in Conglomerates, Autos, Transportation, Energy, Basic Materials, and Construction sectors [3] - The Tech and Finance sectors, which contribute over 50% of S&P 500 earnings, have also seen cuts in estimates, although the Tech sector's revisions have stabilized recently [4][9] Group 3: Company-Specific Insights - FedEx is expected to report earnings of $5.94 per share on revenues of $21.7 billion, reflecting year-over-year changes of +9.8% in earnings and -1.9% in revenues [19] - Nike's expectations for its quarterly release indicate a decline of -89.1% in EPS and -15.4% in revenues compared to the same period last year, attributed to stale product lines and inventory issues [21] - Micron Technology is projected to report earnings of $1.57 per share on revenues of $8.81 billion, with year-over-year changes of +153.2% in earnings and +29.3% in revenues, driven by strong demand in high-bandwidth memory [24] Group 4: Early Earnings Season Results - So far, 9 S&P 500 members have reported fiscal May-quarter results, showing total earnings up +2.4% year-over-year on +7.9% revenue gains, with 77.8% of these companies beating EPS estimates [25]

Core Viewpoint - FedEx is set to report its fiscal Q4 '25 results on June 24th, which is anticipated to provide insights into the company's performance amidst a challenging market environment [2] Company Performance - FedEx's stock has declined by 20% year-to-date in '25 [2] - Over the last twelve months, the stock has decreased by 7.77% [2]

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Group 1 - FedEx is scheduled to release its fiscal Q4 2025 earnings on June 24, 2025, with analysts expecting earnings of $5.86 per share and sales of $21.8 billion, an increase from $5.41 per share and $22.1 billion in the same quarter last year [3][4] - The company currently has a market capitalization of $54 billion and reported $88 billion in revenue over the past twelve months, with operating profits of $6.0 billion and a net income of $3.9 billion [4] - Historically, FedEx's stock has shown varied reactions to earnings announcements, with positive one-day returns occurring in 50% of instances, yielding a median increase of 6.6%, while negative returns also occurred in 50% of cases, with a median decrease of 4.8% [2][8] Group 2 - There are 20 earnings data points logged over the past five years, with an equal split of 10 positive and 10 negative one-day returns, maintaining a consistent 50% probability of positive returns over the last three years [8] - The correlation between short-term and medium-term returns post-earnings can be utilized for trading strategies, particularly if a strong correlation exists between 1D and 5D returns [9][10]

Core Viewpoint - FedEx Corporation (FDX) is expected to report its fourth-quarter fiscal 2025 results on June 24, 2025, with earnings estimated at $5.94 per share, reflecting a 9.8% increase year-over-year, while revenues are projected at $21.7 billion, indicating a 1.9% decline from the previous year [1][2][8]. Earnings Performance - The Zacks Consensus Estimate for FDX's fourth-quarter earnings has been revised downward by 1.5% in the past 60 days [2]. - FDX has a mixed earnings surprise history, with an average surprise of -5.79% across recent quarters [3][4]. Revenue and Demand Factors - Average daily shipments are expected to be negatively impacted by weak demand, adverse weather conditions, and recession fears due to tariff-related tensions [5]. - The Express unit, FDX's largest segment, is projected to see a revenue decline of 3.2% compared to the fourth quarter of fiscal 2024 [6][8]. Cost Management Initiatives - Cost-reduction initiatives under the DRIVE program are anticipated to lower salary and operating expenses by 2.1% and 4.4%, respectively, compared to the previous year [7][8]. - The DRIVE program aims for $4 billion in cost savings by fiscal 2025 through improved efficiencies and technology-focused consolidation [16]. Stock Performance and Valuation - FDX shares have declined 17.1% in the fourth quarter of fiscal 2025, slightly underperforming the Zacks Transportation—Air Freight and Cargo industry's decline of 16.9% [11]. - FDX is trading at a discount based on forward 12-month Price/Sales (P/S) compared to the industry average and UPS, with a Value Score of B [13]. Shareholder Returns - In June 2025, FedEx raised its quarterly dividend by 5.1% to $1.45 per share, indicating a commitment to rewarding shareholders despite current challenges [17]. Long-term Outlook - The company has a long-term earnings growth rate of 10.7%, which is higher than the industry's 9.1%, suggesting strong potential despite current market uncertainties [18].

Core Viewpoint - Analysts expect FedEx to report quarterly earnings of $5.94 per share, reflecting a year-over-year increase of 9.8%, while revenues are projected to be $21.7 billion, down 1.9% from the previous year [1] Earnings Estimates - There has been a downward revision of 1.3% in the consensus EPS estimate over the last 30 days, indicating a collective reconsideration by analysts [1][2] Revenue Projections - The consensus estimate for 'Revenue- FedEx Freight segment' is $2.28 billion, indicating a decrease of 1.3% year-over-year [4] - Analysts project 'Revenue- Federal Express segment' to reach $18.45 billion, reflecting a significant increase of 77.1% from the prior year [4] - 'Revenue- Other and eliminations' is expected to be $928.54 million, showing a year-over-year increase of 11.5% [4] Key Metrics Forecast - 'Revenue- FedEx Express- Freight- Total freight revenue' is estimated at $1.37 billion, suggesting a decline of 16.7% year-over-year [5] - The average daily package volume for 'FedEx Express - Package - Total international export ADV' is expected to be 1.08 million, up from 1.06 million in the same quarter last year [5] - 'FedEx Freight - Weight per shipment - Composite weight per shipment' is projected to be 922.71 thousand, down from 939 thousand year-over-year [6] Daily Volume Estimates - 'FedEx Express - Package - Average daily package volume - Total ADV' is expected to reach 16.19 million, compared to 5.36 million in the previous year [6] - 'FedEx Express - Freight - Average daily freight pounds - U.S.' is estimated at 2.32 million, down from 5.55 million year-over-year [7] - 'FedEx Express - Package - Average daily package volume - International domestic' is projected to be 1.87 million, compared to 1.72 million last year [7] Revenue per Package - 'FedEx Express - Package - Revenue per package - International export composite' is expected to be $48.60, down from $52.08 in the same quarter last year [9] Stock Performance - FedEx shares have changed by +0.6% in the past month, matching the +0.6% movement of the Zacks S&P 500 composite, with a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [10]

Core Insights - FedEx Corporation has announced a 5.1% increase in its quarterly dividend, raising it to $1.45 per share, marking the fifth consecutive year of dividend hikes [1][9] - The company has executed $2.52 billion in share repurchases in the first nine months of fiscal 2025, surpassing the total for the entire fiscal year 2024 [5][9] - FedEx's stock is currently trading at a low price/sales ratio of 0.6, indicating potential undervaluation compared to the sector average of 0.96 [7][8] Dividend and Shareholder Returns - The quarterly dividend will be paid on July 8, 2025, to shareholders of record as of June 23, 2025 [2] - Dividends have increased significantly from $793 million in 2022 to $1.26 billion in 2024, with $1.01 billion already distributed in the first three quarters of fiscal 2025 [3] Capital Allocation Strategy - FedEx's aggressive capital allocation strategy aims to enhance shareholder returns through both dividends and share repurchases [3][5] - The company’s buyback program suggests management views its stock as undervalued and aims to improve per-share metrics [5] Market Position and Performance - The recent multi-year delivery deal with Amazon is expected to provide a significant boost to FedEx's domestic market presence and operational efficiency [10][11] - Despite the positive impact of the Amazon deal, FedEx shares have faced declines, although they have outperformed rival UPS over the past year [12] Financial Outlook and Challenges - FedEx is experiencing weak EPS forecasts and rising costs due to macroeconomic pressures, which are affecting its Freight segment [9][15] - The company has issued a lackluster revenue forecast for fiscal 2025, projecting flat or slightly declining revenues year over year [16] - Operating expenses increased by 2% year-over-year in Q3 fiscal 2025, driven by a 57% rise in business optimization costs [17] Investor Sentiment - Analysts have revised earnings estimates downward due to ongoing challenges, leading to negative sentiment surrounding FedEx stock [19][20] - The combination of weak current performance and uncertain future prospects raises concerns for potential investors [20]

Group 1: FedEx - FedEx announced a dividend increase of $0.28 (5%) to $5.80 per share, effective July 8, with a yield of 2.6% [4][8] - The company reported a slight year-over-year revenue increase to over $22 billion, but a 12% rise in non-GAAP net income to just under $1.1 billion [5] - Despite beating revenue estimates, FedEx's profitability fell short, and management has continually reduced guidance for fiscal 2025, leading to investor caution [6][8] Group 2: Realty Income - Realty Income raised its dividend by a modest 0.2%, resulting in a payout slightly under $0.27 per share, with a yield of 5.6% [9][12] - The company focuses on leasing to stable businesses, such as supermarkets and home improvement stores, and has expanded into new segments and regions [10] - Realty Income's first-quarter revenue increased nearly 10% year-over-year to $1.38 billion, with adjusted funds from operations (AFFO) rising slightly above 10% [11]

Company Performance - FedEx closed at $226.77, marking a +1.07% move from the previous day, outperforming the S&P 500's 0.94% gain [1] - In the past month, FedEx shares have lost 2.24%, while the Transportation sector lost 1.61% and the S&P 500 gained 1.67% [1] Upcoming Earnings - FedEx's earnings report is set to be released on June 24, 2025, with an expected EPS of $5.94, up 9.8% from the prior-year quarter [2] - The Zacks Consensus Estimate for revenue is projecting net sales of $21.7 billion, down 1.85% from the year-ago period [2] Full Year Estimates - For the full year, analysts expect earnings of $18.14 per share and revenue of $87.41 billion, reflecting changes of +1.91% and 0% respectively from last year [3] - Recent changes to analyst estimates indicate near-term business trends, with positive revisions suggesting confidence in business performance [3] Valuation Metrics - FedEx has a Forward P/E ratio of 11.44, indicating a discount compared to the industry average Forward P/E of 14.12 [5] - The PEG ratio for FedEx is currently 1.07, while the average PEG ratio for Transportation - Air Freight and Cargo stocks is 1.75 [6] Industry Ranking - The Transportation - Air Freight and Cargo industry has a Zacks Industry Rank of 191, placing it in the bottom 23% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]