Latest news with #FedEx
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
21 hours ago
- Business
- Yahoo
FedEx Freight announces C-suite leadership for spinoff
This story was originally published on Trucking Dive. To receive daily news and insights, subscribe to our free daily Trucking Dive newsletter. FedEx Freight, an LTL segment slated for a spinoff next year, is filling out its C-suite. The business detailed longtime FedEx leaders who will take over oversight of the new company and also announced an outsider as part of the mix, according to FedEx CEO and President Raj Subramaniam in an earnings call this week and an investor presentation. Those seasoned staff and their new roles are: Eddie Klank as chief human resources and legal officer. Klang has nearly three decades with FedEx, including most recently as corporate VP for corporate governance securities and tax law. Mike Lyons as the chief specialized services and commercial officer. He's been with FedEx for nearly two decades, most recently as SVP of custom critical and freight strategy, per his LinkedIn profile. Clint McCoy as chief operating officer. With nearly three decades at the company, his positions have ranged from operations supervisor to SVP of operations support and engineering. Departing from that internal hiring trend, the business recently hired Michael Rodgers as chief technology officer, the company said. He recently served as CTO for Pilot Flying J and has a background in retail and finance. As previously announced, former FedEx Freight President and CEO John Smith is returning to the role. He currently leads the LTL business along with U.S. and Canada ground operations for Federal Express. R. Brad Martin, who became chair of FedEx's board following the death of Fred Smith on June 21 at age 80, will also serve as chair of the FedEx Freight board. Recommended Reading FedEx Freight operating income drops 6%
Yahoo
a day ago
- Business
- Yahoo
3 ETFs Offering Juicy Dividend Yields of 15% or Higher
With inflation still running hot, investors are searching for new ways to generate meaningful income. This search has sparked a surge of interest in high-yield ETFs, funds designed to offer juicy yields using innovative strategies. Three in particular currently offer up yields of more than 15%, earning them a second look. Let's dive into these three right now. Is Walmart Stock a Buy Right Now? What Investors Need to Know for July 2025. 3 ETFs Offering Juicy Dividend Yields of 15% or Higher FedEx Just Hiked Its Dividend 5%. Should You Buy FDX Stock Here? Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! NEOS Funds introduced the Nasdaq-100 High Income ETF (QQQI) with a clear focus on delivering monthly income. QQQI has a forward annual payout of $7.65 and a yield of 15%, earning it a spot on this generous list. Since its inception in January 2024, QQQI has tracked the Nasdaq-100 Index ($IUXX) with a data-driven call option overlay. The fund doesn't use leverage. Instead, it sells covered calls on Nasdaq-100 constituents to collect premiums, which helps fund those monthly payouts. With managed assets of $1.44 billion and a monthly trading volume of over 2 million shares, QQQI is both sizable and liquid. The expense ratio is set at 0.68%, a reasonable cost for an actively managed, options-based strategy. QQQI is down roughly 1.2% for the year to date. The Roundhill S&P 500 0DTE Covered Call Strategy ETF (XDTE), managed by Roundhill Investments, began trading in March 2024 with a clear mandate to generate weekly income. The annualized forward payout stands at $11.57 and XDTE currently has a forward yield of 27%. XDTE is down just over 12% in the year to date. XDTE tracks the S&P 500 Index ($SPX) by establishing a synthetic long position through deep-in-the-money FLEX options, then sells out-of-the-money zero-days-to-expiry (0DTE) call options each morning to generate premium income. This disciplined, active strategy aims to deliver a steady stream of weekly payouts while capturing most of the S&P 500's overnight gains, though it caps upside potential during sharp rallies. Distributions in excess of earnings are treated as return of capital, which is an important consideration for those focused on long-term capital preservation. XDTE manages $378 million in assets and carries an expense ratio of 0.97%. The YieldMax S&P 500 0DTE Covered Call Strategy ETF (SDTY) is part of the YieldMax ETFs family, managed by Elevate Shares, and tracks the S&P 500 Index. SDTY currently has a forward annualized payout of $11.74 and a yield of 26.9%, providing weekly income, albeit with a unique approach and its own set of risks. Launched in February 2025, SDTY employs a synthetic covered call strategy, combining deep-in-the-money call options for S&P 500 exposure with the sale of out-of-the-money, zero-days-to-expiry (0DTE) call options to generate premium income. This method means SDTY does not own physical stocks, but rather uses derivatives to mirror the index's price return while selling 0DTE calls each day to capture income from market volatility. The result is a fund that provides exposure to S&P 500 gains, though with upside capped by the strike price of the options sold. With managed assets around $12.4 million and a daily trading volume just over 10,900 shares, SDTY is still relatively small and less liquid than some of its peers, but its structure is transparent and its strategy is well-defined. SDTY is down just under 5% over the past three months, and its 1.01% expense ratio is reasonable for an actively managed, options-based approach. High-yield ETFs like QQQI, XDTE, and SDTY provide juicy income at a time when such payouts are hard to come by. With the Federal Reserve keeping interest rates at still-high levels, these funds are likely to remain popular among those looking for regular cash flow. The Fed's hesitation to lower rates, even as the economy faces challenges, means traditional fixed-income options still lag behind. That's why these high-yield ETFs stand out for anyone wanting strong monthly or weekly payouts. On the date of publication, Ebube Jones 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
a day ago
- Business
- Yahoo
Amazon Pours $4B into Rural Delivery Network to Accelerate Same-Day Reach
Amazon's $4 billion investment in its rural delivery network is expected to expand the e-commerce giant's same-day and next-day delivery capabilities to more than 4,000 smaller cities, towns and communities and 'tens of millions' of customers by the end of 2025. According to a company press release, Amazon has already begun offering free same-day and next-day delivery in more than 1,000 rural towns and communities. The tech titan says customers in these areas are shopping online at Amazon more frequently and purchasing household essentials at 'meaningfully higher' rates. More from Sourcing Journal Walmart and Target Double Down on New Delivery Pilots How Can Brands Win Over American Shoppers? Go Back to Basics. Amazon and FedEx Continue to Up Their Game on AI-Enabled Logistics Robots Of the top 50 repurchased items for same-day delivery in these areas, over 90 percent are Amazon's 'Everyday Essentials' products. In the first quarter, the company said the category grew twice as fast as all other U.S. categories due to the faster delivery speeds. Never one to downplay its delivery capabilities, Amazon touted a 30 percent increase in items delivered same- or next-day compared to the same period in 2024. Amazon Prime members have access to unlimited free same-day delivery when spending over $25 at checkout. When the investment was first revealed in late April, Amazon expected to expand its network's rural footprint to more than 200 delivery stations by the end of 2026 and create over 100,000 new jobs. These stations are smaller, local distribution centers strategically positioned for last-mile delivery. The buildout would triple the company's rural network and enable the delivery of 1 billion more packages annually, Amazon has said. Across the U.S., Amazon had 595 package delivery stations already active in the 2025 first quarter, with an estimated 104 expected to be built according to supply chain consulting firm MWPVL International. In a Tuesday blog post, the company included a video showcasing operations at what it calls an RSR+ (Rural Super Rural Plus) site in Dubuque, Iowa, which opened in January 2022. That location namely carries household essentials items that can be easily shipped same-day or overnight, said Doug Herrington, CEO of Worldwide Amazon Stores. To build out the network, Amazon is transforming existing rural delivery stations into 'hybrid hubs' that can store inventory on site to enable delivery within hours and prepare packages for final delivery to customers. This approach is designed to maximize existing rural infrastructure to position products closer to customers' doorsteps and reduce transportation distances. In line with its wider regionalized fulfillment strategy across the U.S., Amazon is using advanced machine learning algorithms to predict which items will resonate with local Prime members based on their unique needs. This includes stocking a mix of popular and frequently purchased items like wireless headphones, coffee pods, crackers, paper towels and diapers, as well as products curated to fit local preferences. Although Amazon is pushing its machine learning capabilities, the company did not reveal the extent of robotics deployments across the rural delivery stations. Amazon's push is opportune, capitalizing on changes implemented at the U.S. Postal Service (USPS), which altered some service levels that may impact rural areas. As of April 1, volume originating in post offices more than 50 miles from USPS processing facilities would take an extra day in transit due to changing timing of transportation. 'We do not anticipate that individual rural customers will experience a significant impact from these adjustments, and in fact are likely to notice positive impacts,' the USPS said in a fact sheet updated April 25. 'The delivery process in rural communities is not changing. Customers, regardless of where they live, will still receive delivery six and sometimes seven days per week.' Amazon's announcement also comes just weeks before its annual Prime Day event, which has been expanded this year to four full days, further putting the company's supply chain under more stress. Prime Day is set to take place from July 8-11. The move also comes briefly after Amazon confirmed it was ending its pilot test where its delivery service partners (DSPs) would conduct same-day deliveries for the company. Amazon contract delivery firms in several U.S. states like Florida, Illinois, Massachusetts, Ohio, Texas and Washington deployed drivers for four- or five-hours shifts in Kia Souls. The program's vehicles were rentals and will be returned to vendors as the program subsides. The program, which started its rollout in 2023, will wind down over the next few months. With the test's conclusion, Amazon is expected to rely more on Amazon Flex gig workers, who would pick up the affected routes. Flex drivers use their own cars to pick up and deliver goods. 登入存取你的投資組合
Yahoo
a day ago
- Business
- Yahoo
FedEx Faces $170M in Tariff Headwinds as US Cracks Down on De Minimis
Tariff-related headwinds are expected to deliver a $170 million hit to FedEx in the first quarter, primarily as the company adapts to revenue pressures out on the trans-Pacific trade lane. FedEx chief customer officer Brie Carere said in an earnings call Tuesday afternoon that China-to-U.S. volumes 'deteriorated sharply' in early May, resulting in flat international export revenue for the fourth quarter. More from Sourcing Journal China Port Volumes Hit Record Highs on US Tariff Truce WTO to Intervene in Trade Disputes Between Canada and China Footwear Firms Rejiggering Supply Chains Will See Long-Term Benefits 'Within that, the vast majority is the impact of de minimis,' said Carere, referring to the recently closed-off trade exemption for low-value packages entering the U.S. from China. Businesses that had supply chains rooted in China, like Shein, Temu and Amazon, all used de minimis to ship goods into the U.S. tax-free via air freight before the Trump administration banned the provision as of May 2. The bilateral China-to-U.S. lane represents around 2.5 percent of consolidated revenue at FedEx and is the company's most profitable intercontinental lane, said chief financial officer John Dietrich. The headwinds have been reflected in FedEx's first quarter guidance with range of flat revenue to 2 percent revenue growth, and an adjusted earnings per share range between $3.40 and $4. Company stock fell 5 percent in after-hours trading Tuesday on the muted earnings guidance. 'Internationally, we expect revenue from the China-to-U.S. lane to remain pressured consistent with what we saw exiting Q4,' Carere said. The Memphis, Tenn.-based carrier did not issue guidance for revenue and earnings estimates in 2026. However, the company remains optimistic it can be well prepared to continually alter shipping routes to match demand. FedEx has shifted its air operations substantially as it adapts to the tariff-driven demand environment and implements its 'Tricolor' network redesign strategy, having reduced capacity on the Asia-to-Americas lane by more than 35 percent in May compared to April. 'The patterns are changing as we speak,' said FedEx CEO Raj Subramaniam in the call. 'Clearly, we are seeing growth from Southeast Asia, for example, Vietnam.' Subramaniam highlighted the April launch of the company's first direct flight from Singapore to Anchorage, Ala., which operates six times a week and allows shipments picked up in Singapore, Vietnam, Malaysia and Thailand on Saturday to arrive in the U.S. on Monday. Another $120 million in headwinds from the expiration of FedEx's air cargo contract with the U.S. Postal Service (USPS) is a major factor in the shifting air freight capacity. In the fourth quarter, the company took a $21 million impairment charge upon retiring 12 aircraft from its rotation. Over the last three years, FedEx has removed a net 31 jet aircraft from its fleet, a 7 percent reduction versus fiscal year 2022. This brings total aircraft at the company to 698, when including feeder planes operated by partner airlines. The reevaluation of the air fleet comes as the courier is two years into a wider $6 billion cost-cutting and consolidation plan. FedEx is targeting $1 billion in cost savings through its upcoming 2026 fiscal year after hitting its $4 billion Drive cost reduction goal through 2025. As part of the company's Network 2.0 delivery network consolidation embedded within Drive, Subramaniam revealed that FedEx is planning on removing roughly 30 percent of the company's service facilities by the completion of the initiative at the end of 2027. Thus far, Network 2.0 has resulted in the closure of 100 stations and the integration of 290 stations. The company says it is still looking to hit the $2 billion savings goal by the conclusion. Roughly 2.5 million in average daily volume flows through Network 2.0-optimized stations 'The best way to describe it is that we're on track. This was a long game exercise and initiative,' said Dietrich. 'We're seeing the 10 percent improvement on our PUD,' referring to reduced pickup and delivery costs in markets that have fully rolled out Network 2.0. The package delivery giant expects to share more updates on the Network 2.0 plan at its investor day in early 2026. As for the fourth-quarter results, FedEx generated revenue of $22.2 billion, up 1 percent from the year prior, on net income of $1.65 billion, or $6.88 per share. Both revenue and earnings exceeded Wall Street expectations. Total average daily package volume climbed 5 percent in the quarter to 16.8 million packages per day. U.S. domestic average daily package volume increased 6 percent to 13.8 million, while ground delivery volumes jumped 10 percent to 6.9 million daily parcels on average. Internationally, export volumes out of the U.S. increased 3 percent to 1.1 million parcels. For the soon-to-be spun off FedEx Freight segment, revenue declined 4 percent to $2.2 billion, while total average shipments dipped 1 percent to 92,100 per day. The earnings report followed the death of FedEx chairman and founder Fred Smith just three days earlier. Smith launched FedEx, then Federal Express, in 1973, and served as the CEO of the company until his retirement in 2022. FedEx named Brad Martin, who was recently appointed as chairman of FedEx Freight, to replace Smith in the chair position. 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
