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FedEx reminded investors just how massive the discrepancy between estimates and reality remains by raising their guidance 16% above the top range of analyst’s current estimates (30% above the consensus).  The economically sensitive FedEx now estimates that they will report $1.10 in the current quarter vs estimates of $.75-$.95.   They cite strong international growth and continued cost cutting as the reasons.  Details were few in the report, but as we’ve been saying for several weeks now it looks like this upcoming earnings season is going to be very similar to the prior few.

“FedEx will exceed previous earnings guidance in the second quarter primarily due to better-than-expected growth in FedEx International Priority and FedEx Ground volumes, coupled with the benefits of our continuing cost control programs,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “Year-over-year growth in our U.S. overnight express and FedEx International Priority services increased each month during the quarter, aided by inventory restocking and our successful sales efforts. Demand for our international services has improved significantly since the first quarter, particularly in Asia and Latin America.”

The guidance boost is a stark reminder of a trend we have pointed to often – the ineptitude of the analyst community to catch up with the reality of earnings.  Of course, this has been and continues to be most evident in our expectation ratio which remains robust and is forecasting another very strong quarter of earnings.  FedEx looks like a strong (though early) start to the upcoming earnings season.  Those expecting a sharp sell-off before earnings season could be disappointed.

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