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The Zacks Analyst Blog Highlights: FedEx, UPS and Amazon
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For Immediate Release
Chicago, IL – September 19, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: FedEx (FDX - Free Report) , UPS (UPS - Free Report) and Amazon (AMZN - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Fed & UPS Divergence: What’s the Catalyst?
FedEx and UPS have been operating as sole leaders in the shipping industry, forming a duopoly in the space. These stocks generally trade side-by-side, but in the last 2 months, there appears to have been a significant deviation from that trend. The questions we need to be asking as investors are, what are the catalysts of this divergence, and is it an industry-wide concern?
FedEx Earnings
FDX just released its August quarter earnings after the bell last night and investors were exceptionally unimpressed, breaking down the shares by 13% as of close Wednesday. The company missed on earnings and lowered full-year guidance, blaming both the trade war and economic weakness as the key catalysts, but I believe there is more to the story that isn’t being mentioned.
FedEx Issues
FedEx cut ties with e-commerce giant Amazon earlier this year saying that the business wasn’t lucrative and only made up 1% of the company’s total business. I believe that the implications were much more extensive than 1%. Now FedEx CEO Fredrick Smith is framing the e-commerce behemoth as a threat to its business.
Currently, Amazon controls roughly 37.7% of the US’s total e-commerce market, according to Business Insider. E-commerce accounts for over 15% of total retail sales in the US and is expected to grow in the doubt-digit percentages for the foreseeable future. Losing a sizable growing business like Amazon and turning them into a competitor is going to cause substantial headwinds for FedEx and even UPS in the future as Amazon relies more heavily on internal logistics.
FedEx’s poorly timed acquisition of TNT Express has also been weighing heavily on the company’s financials. The TNT Express purchase was meant to broaden the firm’s international exposure, but it has been causing more issues than expected. The international economic slowdown along with the extensive integration costs of the TNT Express acquisition has been negatively impacting FedEx’s top and bottom-line.
FedEx has also taken price-cutting measures to increase its market share, which is cutting the businesses overall margins. Management anticipates that its leverage market share and economies of scale will drive stronger profits in the future.
Shipping Market Implications
UPS’s business has been seeing marginally negative impacts from global economic slowdowns in its international segment, but it was more than made up for with domestic sales. The company has been able to consistently grow its business even in the face of trade conflicts and economic concern but considering that FedEx’s earnings covered 2 more months than UPS’s could imply negative results in UPS’s upcoming Q3 earnings.
Some of FedEx’s issues were company-specific, but the impending growth of Amazon’s in-house logistics and distribution teams is cause for concern for all shipping companies. The global economic slowdown is becoming more pronounced and could hit UPS in its earnings release next month.
Take Away
The shipping industry is in crux position as retail is shifting from brick-and-mortar to online. This creates both an excellent opportunity for growth as well as new competitors like industry behemoth Amazon.
Currently, analysts are expecting UPS to grow its topline by 3% and 4% for 2019 and 2020 respectively while also improving net margins. FDX is expected to grow its topline by similar figures, but its profitability will decline due to its aggressive price cuts and the ensuing integration costs with TNT Express that seem to have no end.
Look for UPS’s Q3 earnings release in late October to see if the trade war and global economic slowdown are having industry-wide effects on shipping operations.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: FedEx, UPS and Amazon
For Immediate Release
Chicago, IL – September 19, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: FedEx (FDX - Free Report) , UPS (UPS - Free Report) and Amazon (AMZN - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
Fed & UPS Divergence: What’s the Catalyst?
FedEx and UPS have been operating as sole leaders in the shipping industry, forming a duopoly in the space. These stocks generally trade side-by-side, but in the last 2 months, there appears to have been a significant deviation from that trend. The questions we need to be asking as investors are, what are the catalysts of this divergence, and is it an industry-wide concern?
FedEx Earnings
FDX just released its August quarter earnings after the bell last night and investors were exceptionally unimpressed, breaking down the shares by 13% as of close Wednesday. The company missed on earnings and lowered full-year guidance, blaming both the trade war and economic weakness as the key catalysts, but I believe there is more to the story that isn’t being mentioned.
FedEx Issues
FedEx cut ties with e-commerce giant Amazon earlier this year saying that the business wasn’t lucrative and only made up 1% of the company’s total business. I believe that the implications were much more extensive than 1%. Now FedEx CEO Fredrick Smith is framing the e-commerce behemoth as a threat to its business.
Currently, Amazon controls roughly 37.7% of the US’s total e-commerce market, according to Business Insider. E-commerce accounts for over 15% of total retail sales in the US and is expected to grow in the doubt-digit percentages for the foreseeable future. Losing a sizable growing business like Amazon and turning them into a competitor is going to cause substantial headwinds for FedEx and even UPS in the future as Amazon relies more heavily on internal logistics.
FedEx’s poorly timed acquisition of TNT Express has also been weighing heavily on the company’s financials. The TNT Express purchase was meant to broaden the firm’s international exposure, but it has been causing more issues than expected. The international economic slowdown along with the extensive integration costs of the TNT Express acquisition has been negatively impacting FedEx’s top and bottom-line.
FedEx has also taken price-cutting measures to increase its market share, which is cutting the businesses overall margins. Management anticipates that its leverage market share and economies of scale will drive stronger profits in the future.
Shipping Market Implications
UPS’s business has been seeing marginally negative impacts from global economic slowdowns in its international segment, but it was more than made up for with domestic sales. The company has been able to consistently grow its business even in the face of trade conflicts and economic concern but considering that FedEx’s earnings covered 2 more months than UPS’s could imply negative results in UPS’s upcoming Q3 earnings.
Some of FedEx’s issues were company-specific, but the impending growth of Amazon’s in-house logistics and distribution teams is cause for concern for all shipping companies. The global economic slowdown is becoming more pronounced and could hit UPS in its earnings release next month.
Take Away
The shipping industry is in crux position as retail is shifting from brick-and-mortar to online. This creates both an excellent opportunity for growth as well as new competitors like industry behemoth Amazon.
Currently, analysts are expecting UPS to grow its topline by 3% and 4% for 2019 and 2020 respectively while also improving net margins. FDX is expected to grow its topline by similar figures, but its profitability will decline due to its aggressive price cuts and the ensuing integration costs with TNT Express that seem to have no end.
Look for UPS’s Q3 earnings release in late October to see if the trade war and global economic slowdown are having industry-wide effects on shipping operations.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.