Back to top

Image: Bigstock

FedEx (FDX) Shares Decline 28% in Six Months: Here's Why

Read MoreHide Full Article

Shares of FedEx Corporation (FDX - Free Report) have dropped 28.6% in the past six months, wider than the industry’s 18% decline.



 

Reasons Behind the Downslide

Weakness in global trade has plagued the company for quite sometime now. Consequently, it witnessed negative earnings surprises in each of the last three quarters. Moreover, the company trimmed its earnings per share outlook for fiscal 2019 while announcing third-quarter fiscal 2019 results, primarily due to this headwind. FedEx now anticipates fiscal 2019 earnings per share in the range of $15.10-$15.90 excluding pension adjustments, TNT Express integration expenses and certain other items (prior view was in the $15.50-$16.60 band). Notably, this was the second time that the company resorted to such an action, having previously lowered its earnings projection in December 2018.

High costs have also put pressure on the company’s bottom line lately. This is because FedEx has been investing heavily in facility upgrades at its key divisions, thus pushing up capital expenses. Capital expenses are expected to be as high as $5.6 billion in fiscal 2019. Additionally, integration expenses pertaining to TNT Express are perking up costs. FedEx estimates TNT Express integration charges to be more than $1.5 billion through fiscal 2021. Of these costs, approximately $435 million are expected to be incurred in fiscal 2019.

Surrounded by negativities, the Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2019 earnings has been revised 7.3% downward over the last 90 days.

Zacks Rank & Key Picks

FedEx carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. (SKYW - Free Report) , Hertz Global Holdings, Inc (HTZ - Free Report) and GATX Corporation (GATX - Free Report) . While SkyWest sports a Zacks Rank #1 (Strong Buy), GATX and Hertz Global carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of SkyWest, Hertz Global and GATX have gained more than 33%, 14% and 3%, respectively, so far this year.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in