Latest news with #FDX
Business Insider
7 hours ago
- Business
- Business Insider
FedEx Stock (FDX) Whipsaws as Robust Q2 is Nullified by Future Outlook
Wall Street is suddenly apprehensive about FedEx (FDX) stock following the company's mixed fiscal fourth-quarter earnings report, published earlier this week. The global logistics and transportation company's decision to forgo a fiscal year 2026 EPS outlook spooked the market and prompted a few Wall Street analysts to lower their price targets on its stock. Confident Investing Starts Here: Amid headwinds such as tariffs and an expiring relationship with the US Postal Service (USPS), FedEx is emphasizing cost reductions and optimized operations, with revenue growth expectations ranging from zero to 2% in the first quarter. However, its conservative valuation appears to fully account for these struggles, making me only cautiously Bullish on FDX stock. Disappointing Outlook Sparks Investor Jitters FedEx delivered generally strong results for its fiscal fourth quarter. FDX reported revenue of $22.2 billion, surpassing the consensus estimate of $21.8 billion, and earnings per share (EPS) of $6.07, exceeding the expected $5.86. However, upon closer examination of the report, investors expressed some concern regarding the company's outlook. FedEx's guidance for fiscal Q1 EPS, projected between $3.40 and $4.00, came in below the consensus estimate of $4.06. Additionally, the absence of full-year fiscal 2026 EPS guidance suggests a degree of uncertainty surrounding the company's long-term earnings trajectory. FedEx's fiscal Q4 earnings per share (EPS) outperformance was primarily driven by successful cost-reduction initiatives. Through its DRIVE program, which includes measures such as structural cost optimization, workforce adjustments, and facility consolidation, the company achieved approximately $2.2 billion in savings during fiscal year 2025. FedEx aims to realize an additional $1 billion in savings in fiscal 2026. However, these internal efficiencies have not fully offset the impact of several external headwinds. Like many U.S.-based companies, FedEx is contending with the effects of tariffs. These trade policies can lead to reduced shipping volumes, increased costs for customers, supply chain disruptions, and heightened procedural and compliance complexities—factors that collectively introduce operational challenges and delays. Main Street Data indicates that FDX's operating expenses have risen above $20 billion in the past two quarters. In addition to broader macroeconomic pressures, FedEx recently experienced a significant shift in its business relationship with the United States Postal Service (USPS). Under a longstanding agreement, FedEx Express served as the primary air carrier for USPS, a partnership that generated up to $2 billion in annual revenue at its peak. This contract officially concluded in September 2024, and FedEx has begun to absorb the estimated $500 million financial impact in fiscal year 2025. Compounding this development, USPS subsequently awarded a similar contract to FedEx's key competitor, United Parcel Service (UPS), further intensifying competitive pressures in the air cargo space. Strategic Realignments for Long-Term Resilience FedEx is actively pursuing long-term strategic initiatives aimed at strengthening its business and positioning itself for future growth. One key development is its new partnership with Amazon (AMZN), which enables FedEx to handle large, heavy-package deliveries—a growing segment of the logistics market. Simultaneously, the company continues to enhance its e-commerce capabilities by expanding its network of drop-off locations and introducing more flexible delivery solutions. FedEx's high-margin healthcare segment is showing strong momentum, generating $9 billion in revenue for fiscal year 2025. As part of a broader strategic realignment toward higher-margin business lines, the company has also announced plans to spin off its Freight services. Additionally, the FedEx Rewards loyalty program, targeted at small and medium-sized businesses, achieved an 8% year-over-year increase in U.S. enrollment, underscoring growing customer engagement. From a valuation standpoint, much of the negative sentiment around FedEx appears to be already reflected in its stock price. The company's forward price-to-earnings (P/E) ratio under GAAP stands at 13.21, representing a 43% discount relative to the Industrials sector average. By comparison, United Parcel Service (UPS) trades at a P/E of 14.54 despite exhibiting similar revenue growth. Notably, even amid revenue headwinds, FedEx has demonstrated earnings resilience driven by improved profit margins. Is FedEx a Buy, Sell, or Hold? On Wall Street, FDX boasts a Strong Buy consensus rating, based on 17 Buy, three Hold, and one Sell ratings over the past three months. FDX's average stock price target of $273.43 implies a 23% upside potential over the next twelve months. While Wall Street remains bullish on FDX, the outlook is growing dimmer. For instance, BofA analyst Ken Hoexter lowered his price target on FDX from $270 to $245 while maintaining a Buy rating. The analyst noted that FedEx's FQ1 EPS target fell 'below the firm's prior $4.08 forecast and implies EPS down 6% to up 11% year-over-year.' Moreover, he noted that FedEx's lack of FY26 EPS outlook suggests 'uncertainty on trade policy and macro developments, marking the first time since 2020 it withheld a full-year outlook.' On the other side of the aisle, Ravi Shanker from Morgan Stanley has a Sell rating on FDX with a price target of $200. He expressed caution over FedEx's earnings report, citing 'a mixed performance, with adjusted earnings slightly surpassing expectations but largely due to a one-time gain from asset sales. This raises concerns about the sustainability of earnings quality, as the GAAP earnings were significantly lower than the adjusted figures.' Cost Discipline Prepares FDX for Long-Term Upside In summary, while FedEx continues to navigate several challenges—including tariffs, increased competition, the expiration of its USPS contract, and revenue pressures—the company appears to be taking meaningful steps in the right direction, particularly with a long-term focus. Looking ahead, investors would be well-served to monitor FedEx's profitability metrics as the fiscal year progresses. The company's commitment to achieving $1 billion in additional cost savings, combined with its momentum in high-margin areas such as healthcare, could help create a more efficient and resilient organization over time. For investors with a long-term outlook and a tolerance for short-term volatility, FedEx's current valuation, coupled with a solid 2.53% dividend yield, may offer an attractive opportunity.
Yahoo
2 days ago
- Business
- Yahoo
FedEx Just Hiked Its Dividend 5%. Should You Buy FDX Stock Here?
Parcel and cargo delivery company FedEx (FDX) has had a bumpy ride this year. A shaky global backdrop, marked by constantly shifting U.S. tariff policies and escalating geopolitical tensions, has only added to the pressure. However, the challenges began long before that, with FedEx struggling through three years of weak shipping demand as customers tightened their budgets amid rising costs. In response, FedEx has been trimming expenses and pursuing billions in cost savings. Still, FDX stock hasn't been spared. Shares are deep in the red for the year, reflecting investor concerns around weak volumes and ongoing macro pressures. And yet, investors just got a small reason to be optimistic. 1 Dividend Stock to Buy Yielding Over 7% 1 Defense Stock That Could Benefit in Times of Global Tension FedEx Just Hiked Its Dividend 5%. Should You Buy FDX Stock Here? Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. Earlier this month, FedEx approved a 5% bump to the annual dividend, lifting it to $5.80 per share for fiscal 2026 and marking the fifth consecutive year of dividend increases. CFO John Dietrich believes this boost reflects the company's ongoing commitment to shareholder value through a balanced approach to dividends, buybacks, and investment. But with the stock still under pressure, is a dividend boost enough to get investors back on board? FedEx runs a global logistics network spanning transportation, e-commerce, and business services. With a workforce of over 500,000, the company leans on efficiency, flexibility, and a tech-driven approach to meet the needs of businesses and consumers alike. FedEx is also aiming to reduce its environmental footprint, with a target of achieving carbon-neutral operations by 2040. With a market capitalization of roughly $55 billion, shares of this logistics network company have struggled this year, with FDX stock down 21% year-to-date (YTD). For comparison, the broader S&P 500 Index ($SPX) has returned approximately 3.6% YTD. That highlights the extent to which FDX has underperformed. With the stock in a slump, FedEx is beginning to stand out as a deep-value play. It's currently trading at just 12 times forward earnings and 0.61 times sales, significantly below sector medians. These discounted valuations hint that the market may be overlooking FedEx's long-term potential amid near-term challenges. Alongside its 5% dividend hike for fiscal 2026, FedEx also declared a quarterly payout of $1.45 per share, set to be distributed on July 8. With a forward annualized dividend of $5.80 per share, the stock now offers a yield of 3.04%. That's a compelling figure for income-focused investors, especially given the company's track record of boosting shareholder returns. FedEx unveiled its fiscal 2025 fourth-quarter earnings report on June 24, shattering Wall Street's expectations on both the top and bottom lines. Revenue came in at $22.2 billion, up slightly year-over-year (YOY) and edging past the $21.7 billion forecast. Meanwhile, adjusted EPS climbed 12.2% YOY to $6.07, beating estimates of $5.93. A key driver behind the strong performance was the company's ongoing success with DRIVE, an ambitious transformation initiative launched in fiscal 2023 and aimed at boosting long-term profitability. The program focuses on optimizing operations across its transportation segments, slashing overhead and support costs, and enhancing digital capabilities. Notably, FedEx credited DRIVE for helping it deliver $2.2 billion in structural cost savings in fiscal 2025 alone. Alongside raising the dividend, FedEx is doubling down on shareholder returns with a strong buyback strategy. In fiscal 2025, the company returned a sizable $4.3 billion to investors through a combination of $3 billion in share repurchases and $1.3 billion in dividends. Looking ahead to fiscal 2026, FedEx is setting a cautious yet strategic tone. For Q1, the company expects flat to 2% revenue growth, while adjusted EPS is projected to land between $3.40 and $4.00. For the full year, FedEx aims to unlock $1 billion in permanent cost savings through its DRIVE and Network 2.0 transformation initiatives. The company also plans to reduce pension contributions to as much as $600 million, down from $800 million in fiscal 2025, while allocating $4.5 billion in capital spending toward network upgrades, fleet modernization, and automation to further streamline operations. Evercore ISI recently lowered its price target on FedEx to $259 from $276 but maintained an 'Outperform' rating, citing macroeconomic headwinds such as weakening retail sales, industrial production, and uncertainty surrounding China's exports and tariffs. On the other hand, Citi analyst Ariel Rosa remains bullish on FedEx stock, reaffirming her 'Buy' rating and $267 price target on June 18. The analyst recently highlighted the company's strategic overhaul — including the Network 2.0 integration, the planned Freight spin-off, and ongoing cost cuts under its DRIVE program — as key steps toward enhancing efficiency and long-term earnings. Despite near-term headwinds, Rosa sees these moves as setting the stage for a stronger, more focused FedEx. Overall, Wall Street isn't giving up on FedEx just yet. Analysts maintain a 'Moderate Buy' consensus, reflecting cautious optimism despite FDX stock's recent struggles. Of the 30 analysts offering recommendations, 19 offer a "Strong Buy" rating, one suggests a 'Moderate Buy,' eight give shares a 'Hold,' and two advocate for a "Strong Sell" rating. FDX stock's average analyst price target of $275.86 indicates upside potential of 24% from current price levels. The most optimistic call on the Street sees shares climbing to $354, which would mark a powerful 59% rally from current levels. On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
FedEx Offers Downbeat Earnings Outlook, No Full-Year View, Despite Quarterly Beat
FedEx (FDX) shares fell early Wednesday after the parcel delivery giant provided a fiscal first-quar Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
3 days ago
- Business
- Globe and Mail
FDX Earnings: FedEx Shares Slide amid Soft Outlook
Shares of FedEx (FDX) are down in after-hours trading after the delivery services company reported earnings for its fourth quarter of Fiscal Year 2025 that were accompanied by a soft outlook. Earnings per share came in at $6.07, which beat analysts' consensus estimate of $5.85 per share. In addition, sales increased by 0.5% year-over-year, with revenue hitting $22.2 billion. This beat analysts' expectations of $21.8 billion but did not seem to be enough for investors. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Interestingly, FedEx's express delivery segment saw improved results during the quarter, thanks to cost savings from its DRIVE efficiency program, along with higher shipping volumes in both U.S. and international markets. The company also benefited from stronger pricing (known as base yield). However, some of these gains were reduced by rising transportation and labor costs, fewer operating days in the quarter, and the end of its contract with the U.S. Postal Service. Meanwhile, FedEx's freight division saw a decline in performance. This was mainly due to lower fuel surcharge revenues, lighter shipments, rising healthcare expenses, and higher employee wages (which tend to be the firm's largest expense, as pictured below). The division also faced the challenge of having one less operating day. Still, the impact was somewhat offset by stronger base pricing and a $33 million profit from the sale of a facility. 2026 Outlook Looking forward, management now expects revenue growth in Q1 2026 to be 0% to 2% year-over-year, compared to expectations of a -1.1% decline. Furthermore, adjusted earnings per share are anticipated to land between $3.40 and $4.00. For reference, analysts were expecting an adjusted EPS of $4.11. As you can see, EPS guidance was worse than expected, which was enough to disappoint investors and send shares lower in after-hours. Is FedEx a Buy, Sell, or Hold? Turning to Wall Street, analysts have a Moderate Buy consensus rating on FDX stock based on 12 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average FDX price target of $268.07 per share implies 16.9% upside potential. However, it's worth noting that estimates will likely change following today's earnings report. See more FDX analyst ratings Disclaimer & Disclosure Report an Issue
Yahoo
3 days ago
- Business
- Yahoo
FedEx's $1.65B Quarter Overshadowed by China--US Freight Crash--Wall Street Reacts Fast
FedEx (NYSE:FDX) just waved a red flagand it's not a small one. The logistics giant saw freight volumes between China and the U.S. deteriorate sharply in May, thanks to rising tariffs and a rule change that eliminated the $800 de minimis exemption for small parcel imports. That exemption had been a lifeline for Chinese e-commerce powerhouses like Temu and Shein. With that gone, FedEx's most lucrative trade laneaccounting for 2.5% of its revenuehas suddenly become a lot less predictable. Shares dropped nearly 6% on the news, as FedEx dialed back its guidance and warned that it may not offer full-year forecasts due to what it called an uncertain global demand environment. Warning! GuruFocus has detected 5 Warning Sign with FDX. The impact could go deeper than a single quarter. On the earnings call, CEO Rajesh Subramaniam said it's very, very difficult to predict how trade flows will shape up in the next 30 to 60 days, adding that the outlook could shift quickly if policies evolve. Chief Customer Officer Brie Carere echoed that caution, emphasizing that most of the slowdown stemmed from policynot demand. FedEx now expects revenue growth of just 0% to 2% for the JuneAugust quarter, with earnings per share between $3.40 and $4.00both well below what Wall Street was hoping for. That said, the quarter wasn't a wash. Net income from March to May still climbed 13% to $1.65 billion, even as revenue held flat at $22.2 billion. But with the death of founder Fred Smith just days earlier and Trump-era tariffs still in fluxsome peaking at 145% as recently as Aprilthe mood at FedEx feels cautious at best. The company may be holding ground for now, but if trade tensions linger or customs policies tighten further, investors should be prepared for more turbulence ahead. This article first appeared on GuruFocus.
