From Apple to Zillow, there have been plenty of must-watch earnings reports this year. Few traders would have put FedEx on their list of potential show stoppers, but as it turns out, this company’s woes have ripple effects far beyond the scope of this package delivery specialist.
Indeed, FedEx’s struggles are truly America’s struggles. Consider what it means if FedEx drops an earnings-day bombshell: if packages aren’t being delivered, it’s because supply chains are broken and global shipment volumes are anemic.
In other words, people aren’t ordering package deliveries because the economy is in shambles, and they’re not receiving their packages in a timely manner because workers and materials are in short supply. So, ignore FedEx’s quarterly report at your own peril, as it’s actually a fair gauge of the U.S. economy’s health.
Suffice it to say that FedEx stock was trending on Friday, but not in a good way. The shares plunged 21.4% in a single trading session, marking the stock’s biggest one-day drop since at least 1980 and its lowest level since July 2020.
Now, if you’re a contrarian investor, you might be tempted to scoop up shares of FedEx stock under the assumption that this must be an overreaction. After all, FedEx’s business couldn’t be in such bad shape, could it?
Before you jump headfirst into the trade, consider the words of Robert W. Baird & Co. analyst Garrett Holland. He observed an “ugly quarter” for FedEx, concluding that “Global freight demand has significantly deteriorated.”
Courtesy: Financial Times
Deutsche Bank analysts went even further, calling FedEx’s quarterly report “the weakest set of results we’ve seen relative to expectations in our ~20 years of analyzing companies” in roughly two decades of analyzing companies. Was the company’s first-fiscal-quarter data really all that bad, though?
Indeed, the results were terrible. Analysts on Wall Street expected FedEx to earn $5.10 per share, while the company posted a wide miss with just $3.44 per share. Making matters worse, FedEx withdrew its full-year per-share earnings guidance.
You know it’s bad when a company won’t even made a prediction as to how much it will earn throughout the year. As Citi analyst Christian Wetherbee put it, “Results were significantly worse than we feared”; he and multiple other Wall Street experts promptly downgraded their ratings and price targets on FedEx stock.
In order to quell investors’ fears and possibly save the company from complete ruin, FedEx is doing what many other U.S. businesses are doing in 2022: cutting costs and sending workers home. In this vein, FedEx plans to shutter more than 90 office locations, slow hiring, and consolidate some package-sorting operations.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
Wealth Education and Investment Principles Are Hidden From Public Database On Purpose!
Build The Knowledge Base To Set Yourself Up For A Wealthy Retirement and Leverage The Relationships We Are Forming With Proven Small-Cap Management Teams To Hit Grand-Slams!
Amid this harrowing backdrop, FedEx CEO Raj Subramaniam had to face the music as the company’s dismal results were released to the public. Really, Subramaniam had little choice but to admit that he’s “very disappointed in the results that we just announced here.”
Subramaniam didn’t limit his downbeat commentary to company-specific concerns, though. Indeed, the CEO connected the dots to broader global financial conditions, saying, “We are a reflection of everybody else’s business, especially the high-value economy in the world.”
Swissquote senior analyst Ipek Ozkardeskaya also drew macro-level conclusions, warning, “The FedEx warning came as a slap. It’s a solid sign that the economy started slowing… This is certainly the first in a series of warnings that we may see for the quarters to come.”
The analysts’ alarm bells ring loudly, but perhaps not as loudly as Subramaniam’s signals. When asked whether the global economy is headed for a “worldwide recession,” the FedEx CEO starkly replied, “I think so; these numbers don’t portend very well… We are seeing volume decline in every segment around the world… So we just assume at this point that economic conditions are not going to be good.”
If anybody would be able to gauge economic conditions, it would be the head of a logistic company like FedEx. Subramaniam’s warning for Wall Street should shake investors to the core, if they’re willing to listen.
Going forward, expect mainstream media pundits to look to FedEx as a bellwether business – but also expect them to miss the point entirely. The government’s relentless money printing, and now Federal Reserve’s futile efforts to contain inflation, have brought FedEx and many other once-thriving U.S. businesses to their knees in 2022.
And so, most Wall Street mouthpieces will lament FedEx’s poor performance and issue their “sell” ratings and their price-target chop jobs. Meanwhile, Nero will play the fiddle and Rome will burn – or at least, your first-class package of positive earnings surprises won’t show up this time around.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
Protect Yourself Now, By Building A Fully-Hedged Financial Fortress!
Legal Notice: No matter how good an investment sounds, and no matter who is selling it, make sure you’re dealing with a registered investment professional. Use the free, simple search at investor.gov
We are not brokers, investment or financial advisers, and you should not rely on the information herein as investment advice. We are a marketing company. If you are seeking personal investment advice, please contact a qualified and registered broker, investment adviser or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Please do your own research before investing, including reading the companies’ SEC filings, press releases, and risk disclosures. Information contained in this profile was provided by the company, extracted from SEC filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it.
Please read our full disclaimer at CrushTheStreet.com/disclaimer