Why FedEx Stock Is Down By 5% Today

To see all exchange delays and terms of use please see Barchart’s disclaimer. FedEx has survived many economic cycles in the past, and there is no reason to believe the company can’t survive whatever lies up ahead. But given the magnitude of the miss, and the uncertainty about what is coming in the months ahead, investors understandably prefer to head to the sidelines right now. More specifically, on Friday, the company announced that FedEx Express CEO David Cunningham will retire effective Dec. 31, 2018, after just two years at the helm. Cunningham will be succeeded by current FedEx Express chief marketing and communications officer Raj Subramaniam.

• FedEx also warned it expects to earn as little as $2.65 per share in its fiscal second quarter, compared to analyst expectations for $5.48 per share in earnings.
• But FedEx’s stock could use a prolonged rally given that shares are currently down 15% over the past 12 months, largely due to global supply chain constraints.
• Goldman Sachs rate strategists expect the U.S. 10-year yield to peak at 4% by the end of 2023, and the 2-year at 4.3% by the second quarter.
• The company said it expects to earn $3.44 per share in the quarter, well below analyst expectations for $5.14 per share in earnings.
• The company’s capital spending guidance was lowered from $7.2 billion to $7.0 billion.

The pound has plummeted against the greenback this year on a combination of dollar strength and U.K. Transport stocks are often seen as a bellwether for the U.S. economy, so FedEx’s warning could create selling pressure across the board on Wall Street as investors prepare for a potential recession. Shares of Alcoa have dropped 18% over the last week as fears rise around a coming economic slowdown, which would cut demand for metals like aluminum. Further upside to Wall Street’s estimates could come from Tesla’s driver assistance system it hiked prices on earlier this month, Rosner said. The 1-year Treasury yield, meanwhile, has surged well above 4% and was trading at 4.026% on Friday morning. But the spike in Treasury yields this year makes makes the market look like it may be overvalued already, even without adjust earnings estimates, according to Bank of America’s Savita Subramanian.

FedEx (NYSE:FDX) Consolidates Operations; Pilots Fear Job Loss

The tech-heavy index fell by 1.7% on Friday morning and has now lost more than 6% for the week. The major market averages opened sharply lower on Friday morning, with the Dow falling more than 300 points. “With continued declines in energy prices, the median expected year-ahead inflation rate declined to 4.6%, the lowest reading since last September,” Surveys of Consumers director Joanne Hsu wrote. “However, it is unclear if these improvements will persist, as consumers continued to exhibit substantial uncertainty over the future trajectory of prices.” “Energy prices are showing signs of stabilizing, despite the prevailing risk-off market tone,” TD Securities said Friday in a note to clients. West Texas Intermediate crude futures, the U.S. oil benchmark, added 0.7% to trade at $85.68 per barrel on Friday.

“Given Mr. Cunningham, who is 57 years old, had run the company’s Asia-Pacific region, and was on the company’s Strategic Management Committee, the unexpected retirement could indicate a potential miss on Express operational targets.” The company said it is closing 90 office locations, shutting down five corporate office facilities and pausing hiring efforts, as part of those cost-cutting measures. Shares of FedEx tumbled 15.3% in after hours trading after the transport company withdrew its full-year guidance, and said it will implement cost-cutting initiatives to contend with a worsening macro. Amid a tough year for the sector, some investors are seeking refuge in the relative safety of mega-cap stocks. Top tech investor Paul Meeks weighs in on two such stocks and reveals which he prefers in the current environment.

FedEx (FDX) News Today

FedEx’s announcement comes soon after a hotter-than-expected inflation report in the U.S. on Tuesday, which raised concerns that the Federal Reserve will be forced to cause a recession to cool prices. That data sparked a decline of more than 1,200 points for the Dow. Lufax also initiated 2023 guidance for new loans enabled in the range of RMB190 https://investmentsanalysis.info/ billion to RMB210 billion. Though the quality of those loans will likely be higher than in the past, and Lufax’s bottom-line strength is admirable, the market obviously isn’t pleased that macroheadwinds continue to hold back its top-line growth. All of those fees, which are higher than last year’s charges, run from Oct. 2 through Jan. 14.

It should be noted that analyst estimates have been moving lower in recent weeks, and it remains to be seen whether the company’s new guidance will change this trend. For the full fiscal year, FedEx expects to report earnings of $20.50 – $21.50 per share. The company’s capital spending guidance was lowered from $7.2 billion to $7.0 billion.

The shipping services giant suffered a downgrade following a key executive departure.

Data are provided ‘as is’ for informational purposes only and are not intended for trading purposes. Data may be intentionally delayed pursuant to supplier requirements. Tomi Kilgore is MarketWatch’s deputy investing and corporate news editor and is based in New York. Basically, if transports aren’t taking, the economy isn’t moving, and the stock market will be falling.

Both war and climate change have hit the global economy hard in 2022. Central banks concerned about inflation have been raising interest rates to cool it, just not in a coordinated way. This recently led the World Bank to raise fears of a global recession unless coordination is achieved.

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Trefis estimates FedEx’s fiscal Q revenues to be around $22.0 Bil, slightly above the consensus estimate of $21.9 billion. FedEx, over the recent quarters, has seen an increase in demand for shipments, primarily led by a surge in e-commerce orders, as people preferred to stay in-doors, during the pandemic. However, Fedex’s
FDX
peer – UPS – reported a decline in ground shipments in Q2, and this had an adverse impact on FDX stock as well. While this should likely also impact FedEx, over the recent months, there has been a rise in total number of Covid-19 cases, and it means that the ground shipments may continue to trend higher in the near term. Looking back at fiscal Q4 2021, revenues grew a solid 30% to $22.6 Bil, with Ground segment seeing a 27% y-o-y jump in revenues, compared to a 32% rise for Express and a 38% jump in the Freight segment. Our dashboard on FedEx’s Revenues offers more details on the company’s segments.

Succeeding Smith will be Raj Subramaniam, a 30-year veteran of the delivery and logistics industry and current president and COO of FedEx. Subramaniam will serve as both CEO and president of FedEx after June 1, while Smith plans to transition to executive chairman of the company’s board of directors. While the U.S. economy remains solid, our international business weakened during the quarter, especially in Europe. We are taking action to mitigate the impact of this trend through new cost-reduction initiatives. Hoexter is referring to the departure of Dave Cunningham, who FedEx recently said would be leaving his role as head of the company’s air delivery unit.

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Higher transportation and wage costs have put some pressure on the company’s profits. At the same time, FedEx noted that “the quarter’s results also benefited from lower variable compensation expense and less severe winter weather, resulting in favorable year-over-year comparisons”. FedEx also warned it expects to earn as little as $2.65 per share in its fiscal second quarter, compared to analyst expectations for $5.48 per share in earnings. The company said it was withdrawing guidance for the full year due to the uncertain economic environment.

Because Wall Street sees FedEx as a bellwether, an unexpected update about the company’s performance rattled investors. The company is going to take some of its aircraft out of service and scale back Sunday delivery. On top of that, it intends to close almost 100 retail locations and, like many companies right now, it plans to press pause on hiring until the economic uncertainty around the world clears up.

• Shares of Alcoa have dropped 18% over the last week as fears rise around a coming economic slowdown, which would cut demand for metals like aluminum.
• Surcharges will apply to enterprise customers that ship more than 20,000 residential and Ground Economy packages per week during any of the “calculation weeks” beginning Oct. 9.
• The tech-heavy index fell by 1.7% on Friday morning and has now lost more than 6% for the week.
• Unionized UPS workers received a $2.75-an-hour wage increase in the first year of the contract, which was implemented retroactive to Aug. 1 after eligible rank-and-file members voted to ratify the contract on Aug. 22.
• “Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term,” elaborated FedEx CFO Alan Graf.

We have now updated our model for FedEx to take into account the latest quarterly release and guidance. We now estimate full-fiscal 2022 adjusted EPS to be $20.50, compared to $21.33 Forex deposit bonus earlier. We have not made any changes to our revenue forecast of $91.2 billion, and the change in EPS is on account of a -25 bps revision in net margins to less than 6%.

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The company reported quarterly revenue of $22 billion, which beat the estimate of $21.91 billion. Separately, FedEx also announced its surcharges for peak season services. Again, residential delivery surcharges will be assessed depending on a shipper’s weekly volumes starting Oct. 9. From Oct. 9 through Jan. 14, the surcharges will apply with a three-week lag after volumes are calculated. Surcharges will apply to enterprise customers that ship more than 20,000 residential and Ground Economy packages per week during any of the “calculation weeks” beginning Oct. 9. FDX stock flourished during the pandemic as demands for its delivery services skyrocketed.