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Will Adobe's earnings surprise to the upside?

Pinchas Cohen | Tuesday 21 September 2021

Computer software provider Adobe (ADBE) is scheduled to release its corporate results on Tuesday, after the bell. The data will cover the fiscal quarter ending in August 2021. Consensus Earnings Per Share (EPS) is $3.00, according to Zacks Consensus Estimate, an independent investment content provider. This forecast reflects growth of 16.7% from the same quarter last year when the company posted an EPS of $2.57. Furthermore, the expected revenue for the fiscal third quarter is $3.88 billion, indicating expansion of 20.3% on a year-over-year basis. 


The software company has been beating the Zacks Consensus Estimate in all the trailing four quarters. Actual earnings have surpassed the estimate by more than 8% on average. Will Adobe perform better than expected yet again this Tuesday afternoon? 

The remote work environment provides the right environment that just might enable the company to keep growing. Jobs that allow employees to work from home are increasing, with the US leading the global trend.  Furthermore, business analysts are calling for working from home to become permanent.

Adobe itself seems to be headed in that direction, providing its employees with flexibility. The future of work at Adobe is seen to be a hybrid environment, with employees splitting their time between the home and the company office. 

Adobe may just be at the right place and at the right time. It stands to reason that working from home will require adjustments. The shift may increase demand for just the services that this company provides: data, insights, content, personalization, and customer journey management. The trend of remote work has already been in place since the height of the pandemic. And it might be reflected in the company’s sales in the coming report card. 

How Will FedEx Adjust to a Remote-Work Environment?

Another big company that is slated to publish its earnings report at the same time as Adobe is the American conglomerate holding company FedEx (FDX). Like with Adobe, the report will be for the fiscal quarter ending in August 2021. The consensus Earnings Per Share (EPS) is $4.96, according to Zacks Investment Research, based on the predictions of 8 analysts. This result, should it materialise, will be slightly less more than the $4.87 posted in last year’s corresponding quarter. 

How will a company whose business is deliveries fare in an environment in which people work individually from home rather than all together in an office? Residential deliveries are not as profitable as business shipments, because fewer parcels are delivered to each residence and there is more driving between homes which requires more fuel and manpower. This is why FedEx is working on reducing the expense of packages originating online, which are mostly for individual consumers. Rather than hand those off to the post office, FedEx wants to deliver those packages itself, moving to seven-day operations.

FedEx’s SmartPost packages have provided consumers until now with a cost-effective option of low-weight, high-volume deliveries for residential shipping, by sharing the service with the post office. Recently, FedEx has rerouted more than 60% of those deliveries to be handled in-house, and by the end of November, FedEx is expected to shift the vast majority of these shared packages with the post office to FedEx deliveries alone. The objective is to increase the number of packages per route and at each stop, utilising the company’s manpower and fuel more efficiently. Finally, FedEx will have large shippers organize parcels before deliveries, to spread out deliveries to Sunday, when the company’s network is freer, maximising efficiency. 

FedEx is working on hiring 70,000 seasonal employees to work during the holidays. The shipping giant estimates that the quantity of holiday packages will grow by up to 27% from last year’s peak to a holiday demand high of 100 million packages a day by 2023. Meanwhile, FedEx is running a “National Hiring Day” across America, to sign up new workers ahead of what it expects to be another busy holiday season.

While this changing world seems to fit Adobe’s software services like a glove, will FedEx successfully manage to adjust its physical shipping business to a remote-work environment in a way that will allow its business to grow?

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