While FedEx stock closed over $200 on Thursday, September 15, investors were in for a rude awakening this morning as shares plummeted over 25% at market open. Right now, the stock sits below $160/share. Altogether, the company lost a market cap of about $11 billion as a result. This is certainly a problem for FedEx and its investors – but, analysts are suggesting that this may point toward a looming recession. How did we get here, though?
Yesterday after the market closed, FedEx released a pre-earnings announcement to warn investors of a brutal third-quarter performance. Executives are going back on everything they’ve anticipated & projected this year. They’ve withdrawn their full fiscal year outlook which was issued just 3 months ago. For the quarter that ended August 31, projected EPS came in at $3.44 – way under projections of $5.14. Total revenue missed the mark, too.
And unfortunately, the current quarter is off to an abysmal start as well. Wall Street is estimating non-GAAP earnings of $5.48, while they currently sit at $2.75. As a result of all this, FedEx is reporting that they’ll implement substantial cost-cutting measures. One such effort includes the closure of 90 offices and 5 corporate locations.
What went wrong for FedEx, though? Executives at the company report that the global economic trends have dramatically slowed their volume. The two segments that have caused the most damage are Asia and Europe – demand for packages is considerably weaker than anticipated. This is what has analysts pointing to a looming recession – among many other factors. And, FedEx CEO Raj Subramaniam was quick to agree and take the copout – claiming himself he believes these numbers are the result of a pending global recession.
But, recession aside, investors are perplexed about the state of FedEx stock right now. Surely the 25% drop is an overreaction to negative news and investor sentiment, right? With VectorVest, you can tune out the noise and evaluate stocks based purely on an objective tried-and-true form of analysis. And if you’re not sure what you should do about FedEx right now, keep reading.
The one thing FedEx investors should watch right now…
VectorVest’s stock forecasting software uses three proprietary ratings to analyze any stock and give investors a clear buy, sell, or hold recommendation at any given time. These are Relative Value (RV), Relative Safety (RS), and Relative Timing (RT). These sit on a simple scale of 0.00-2.00 – with 1.00 being the average. Together, they make up the overall VST rating a stock is given. Only one thing matters right now though, price direction. :
- Very Poor Timing: the RT rating analyzes a stock’s price trend – taking into account the direction, dynamics, and magnitude of the price movement. Anything under 1.00 shows a negative price trend with downward pressure. As for FedEx, the RT rating of 0.44 is very poor.
Don’t try to catch a falling knife. We don’t know how low the stock will fall, so don’t be too eager to jump in. If you want to invest in FedEx, wait for the price trend to turn back up. There will likely be head fakes along the way, so check the VectorVest Relative Timing indicator (RT) to identify the turnaround. When RT crosses above 1.00, you’ll know that FedEx has established a new upward trend. Until then, keep it in your WatchList.
, For a complete report with a clear buy, sell, or hold recommendation, you can analyze FedEx stock for free and make a decision with no guesswork, no emotion.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for FedEx, it has very good upside potential with fair safety. However, it also has a very strong downward price trend pushing the stock’s price lower and lower.
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