Why FedEx Corporation (NYSE: FDX) stock is crashing

Free $100 Forex No-Deposit Bonus

FedEx Corporation (NYSE: FDX) stock crashed over 13.7% on September 18th, 2019 (as of 12:03 pm GMT-4 ; Source: Google finance) after the company has cut its profit forecast significantly for the year as it is facing higher costs to expand services, lower revenue from cutting ties with Amazon.com Inc. and a worsening economic situation. The company in the first quarter of FY 20 has reported 11% fall in the profit to $745 million due to the weakness in its Express unit, which delivers packages by jets and is being hampered by global trade disruption.

FDX in the first quarter of FY 20 has reported the adjusted earnings per share of $3.05, missing the analysts’ estimates for the adjusted earnings per share of $3.15, according to Analysts polled by FactSet. The company had reported the adjusted revenue of $17.05 billion in the first quarter of FY 20, missing the analysts’ estimates for revenue of $17.06 billion.

Moreover, the operating results of the company has fallen mainly due to weakening global economic conditions, increase in the costs to expand service offerings and continued mix shift to lower-yielding services. The impact of one fewer operating day and the loss of business from a large customer also have negatively affected the company’s results. These factors were however partially offset due to lower variable incentive compensation expenses, revenue growth at FedEx Ground as well as rise in yields at FedEx Freight.

Meanwhile, effective from January 6, 2020, FedEx Express, FedEx Ground and FedEx Home Delivery shipping rates will get raised by an average of 4.9%,and FedEx Freight shipping rates will increase by about 5.9%.

FedEx has lowered its fiscal 2020 earnings forecast as the company’s revenue outlook has been reduced. This is driven by increased trade tensions as well as additional weakening of global economic conditions since the company’s initial fiscal 2020 forecast in June. The company’s revised outlook also shows that increased FedEx Ground costs and August’s loss of FedEx Ground business from a large customer. Further, the FedEx ETR is now projected to be in the range of 24% to 26% before the year-end MTM retirement plan accounting adjustment, on the back of lower-than-expected earnings in certain non-U.S. jurisdictions.

FedEx now anticipates earnings to be in the range of $10.00 to $12.00 per diluted share before the year-end MTM retirement plan accounting adjustment, and earnings to be in the range of $11.00 to $13.00 per diluted share before the year-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses. The capital spending is expected to be of $5.9 billion.

Copyright © 2020. All Rights Reserved. FXDailyReport.Com
Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. FXDailyReport.com will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.