Is FedEx Stock Bottoming Out?

FDX: FedEx logo

FedEx stock (NYSE: FDX) is down 21% this year, compared to a 17% fall for the broader S&P500 index. Due to a decline in delivery volumes, FedEx and other logistics companies have had a tough year. The big e-commerce surge seen through the lockdown phase of the Covid-19 pandemic is now cooling off. Furthermore, the weakening U.S. economy and high inflation further add to the woes. Our analysis of FedEx’s Revenue details how the company’s revenues are trending.

Yesterday, the company reported preliminary Q1 fiscal 2023 results (fiscal year ends in May), with revenue of $23.2 billion, up 5.5% y-o-y, but falling below the consensus estimate of $23.6 billion, primarily due to softening volume. Higher costs resulted in a nearly 150 bps y-o-y drop in operating margin to 5.3% on an adjusted basis. Our FedEx operating income comparison dashboard has more details (it does not include Q1 fiscal 2023 numbers yet). The company reported earnings of $3.44 per share, reflecting a 21% y-o-y decline. This marks a significant miss from the consensus estimate of $5.14.

To reduce costs, the company has decided to close 90 offices, cut its flight frequencies, park aircraft for now, and cancel some of its network capacity projects, among other actions. It lowered the capital expenditure outlook but withdrew its earnings guidance for fiscal 2023. For Q2 fiscal 2023, FedEx expects revenue to be between $23.5-$24.0 billion and earnings to be $2.75 per share. This compares with the consensus estimate of $24.9 billion and $5.48, respectively, marking a significant difference from the street expectations.

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This comes as no surprise that the preliminary results didn’t sit well with the investors. FDX stock is trading 17% lower after hours, pointing to levels of around $170, implying a fresh 52-week low likely in today’s trading session. Given the current macroeconomic environment and a significant dip in earnings estimates, FedEx stock may take a while to bottom out, despite a significant expected decline in today’s trading session.

While FDX stock looks like it is headed for lower levels, it is helpful to see how FedEx’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for FedEx vs. Amerco.

With higher inflation and the Fed raising interest rates, among other factors, FedEx stock has fallen 21% this year. Can it drop more? See how low FedEx stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Sep 2022
MTD [1]
YTD [1]
Total [2]
 FDX Return -3% -21% 10%
 S&P 500 Return -1% -18% 74%
 Trefis Multi-Strategy Portfolio 0% -16% 233%

[1] Month-to-date and year-to-date as of 9/15/2022
[2] Cumulative total returns since the end of 2016

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