FedEx, Chewy earnings — What to know in markets Tuesday

Heidi Chung

Earnings will be in focus Tuesday when FedEx (FDX) and Chewy (CHWY) report quarterly results after the market close.

FedEx’s report comes amid a weaker macroeconomic environment, and the transportation giant has previously lowered guidance on global slowdown concerns.

In June, FedEx announced that it was discontinuing express shipping service for e-commerce giant Amazon. Then in August, FedEx officially divorced from Amazon by halting its ground shipping services. The divorce between FedEx and Amazon was seen as a big blow to FedEx, which has been severely underperforming as of late, as rivals such as UPS (UPS) have been thriving. Shares of FedEx have tumbled 30% over the past year, while UPS rose 5%. UPS still maintains its partnership with Amazon.

While the Amazon-FedEx divorce has been perceived as a big loss for the shipping giant, the Amazon partnership wasn’t actually a large chunk of business for FedEx. Amazon only represented a little over one percent of FedEx’s total revenue last year.

Management’s commentary surrounding China will also be in focus. FedEx had several instances in which operational errors prevented Huawei packages from being delivered to the U.S. China represents a mid to high single digit portion of FedEx’s overall revenue.

Analysts expect FedEx to report first-quarter adjusted earnings of $3.16 per share on $17.06 billion in revenue. The options market is implying a 4% move in either direction following its report, which is in line with the average post-earnings move over the past four quarters.

Meanwhile, recent IPO Chewy will also deliver second-quarter financial results after the closing bell. Tuesday’s report is Chewy’s second earnings announcement since its IPO in June. The online pet products retailer is expected to report an adjusted earnings loss of 11 cents per share on $1.13 billion in revenue, according to data compiled by Bloomberg.

Consensus anticipates that Chewy’s second quarter revenue will have grown at a healthy 30%. Margins are also expected to have improved during the quarter. Nevertheless, much like its recent IPO peers, Chewy is a high-growth story, but the company has yet to turn a profit.

Chewy debuted on the public market June 14 after pricing shares at $22. The stock soared 34% since its IPO and has outperformed the broader market which is up 4.5% in the same time period.

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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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