What Happened?
Shares of parcel and cargo delivery company FedEx (NYSE: FDX) fell 10.8% in the morning session after the company reported weak first-quarter (fiscal Q3 2025) results: its EPS and EBITDA fell short of Wall Street's estimates.
To make matters worse, the company also lowered its full-year sales and profit outlook, pointing to ongoing struggles in the US economy, especially in its business-to-business segment.
On the other hand, FedEx narrowly topped analysts' revenue expectations. Still, this was a softer quarter.
Following the results, Loop Capital downgraded the stock from Neutral to Sell, citing two reasons: First, the Trump administration was set to roll out a major tariff strategy on April 2nd, 2025, and since FedEx is practically the face of global trade, that could spell trouble. Second, recession risks are climbing, and FedEx historically struggles in downturns. Its Express division runs on thin margins, meaning even a small drop in revenue can hit profits hard.
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What The Market Is Telling Us
FedEx’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for FedEx and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 15.4% on the news that the company reported weak Q3 earnings results. Its EPS missed, and its revenue fell short of Wall Street's estimates. The outlook also was underwhelming, with full-year EPS guidance below expectations. The company noted the quarter was challenging as it observed weaker-than-expected demand in the U.S. domestic package market. Management attributed the weakness to several factors, including a weak industrial economy and shifting customer preferences towards lower-cost services. Overall, this was a mediocre quarter.
FedEx is down 15.9% since the beginning of the year, and at $230.49 per share, it is trading 26.5% below its 52-week high of $313.52 from July 2024. Investors who bought $1,000 worth of FedEx’s shares 5 years ago would now be looking at an investment worth $2,063.
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