Meanwhile, Wall Street’s major indexes this week were on course to fall by more than 2% each, hurt largely after August inflation at 8.3% came in above expectations. “The bond market suddenly reacted with yields trending higher and this had a negative impact on risky assets which sold off in a synchronized way,” Gasparet said. Further deterioration of macro data could justify further https://trading-market.org/the-difference-between-an-agent-broker-in-investment-banking-2021/ weakness ahead for equities, he said. Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers.
The US economy can’t function smoothly without UPS. That’s why a strike will hurt – CNN
The US economy can’t function smoothly without UPS. That’s why a strike will hurt.
Posted: Fri, 07 Jul 2023 19:57:00 GMT [source]
Moreover, the intense competition in the e-commerce market has also impacted pricing dynamics in the delivery industry. E-commerce businesses are constantly seeking cost-effective shipping solutions, which has led to increased price competition among delivery service providers. This has put pressure on FedEx to optimize its cost structure, streamline operations, and find innovative ways to reduce costs while maintaining service excellence. However, the e-commerce boom has also posed challenges for delivery service providers.
Markets selling off on triple witching day
According to Stifel’s Chan, there is plenty to alarm investors, and everyone else. All three major US stock indexes slid to levels not touched since mid-July, with the S&P 500 closing below 3,900, a closely watched support level. Add stocks to watchlist to monitor them daily and get important alerts. Investors pulled out of cyclicals, expecting Powell to keep tightening no matter what. At risk in a slowing economy, which they have bridged with a low valuation and a lot of cost-cutting.
Given time, the company can outperform again, and investors today can enjoy a 3% dividend yield while they wait. But no shipper can defy the laws of economics, and FedEx is unlikely to soar until the global economy gets back on track. The company’s rivals in the shipping industry were also dragged down, with UPS falling nearly 5 percent. Shares in Deutsche Post in Frankfurt and Royal Mail in London also tumbled. After shipping giant FedEx released new forecast details Friday, the company’s FedEx Corp stock saw share prices plunge amid fears of a slowdown.
European markets slide 1% as recession, energy fears persist
Home Depot, Honeywell and Microsoft followed, all falling around around 8% this week. In the S&P 500, Adobe and FedEx fell around 25% and 23%, respectively. Nucor, Eastman Chemical and International Paper rounded out the top five worst week over week performers within the index, with each posting losses of around 16%.
- These measures reflect FedEx’s commitment to continuously optimize its operations and deliver cost savings while maintaining service standards.
- Moreover, the intense competition in the e-commerce market has also impacted pricing dynamics in the delivery industry.
- While it provides a good read for two key parts of the economy, it also serves as reliable indicator of what may be coming down the road.
The cost-saving measures implemented by FedEx in FY 2023 are expected to generate significant savings of $2.2 billion to $2.7 billion, with approximately $1 billion of the savings being permanent. These actions are crucial in mitigating the impact of the economic challenges and service-related issues that the company faced in Asia, Europe, and the U.S., and are aimed at positioning FedEx for a strong recovery in FY 2024. The company, similar to how airlines emerged as leaner businesses from the pandemic disruption in 2020, is likely to emerge as a much more flexible business that is less susceptible to the business cycle effect. In addition to operational changes, FedEx is taking steps to right-size its overall cost structure by addressing overhead expenses.
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In the last 5 years, FedEx Corporation has become a better competitor to UPS, and I believe the positive momentum will continue from both a financial performance perspective and a market performance perspective. The expected impact of a recession was priced in 2022, which leaves room for FedEx to exceed expectations in the next fiscal year aided by the successful execution of recently implemented business transformation strategies. On the positive side, the growth of e-commerce has resulted in increased shipping volumes for FedEx, as more consumers turn to online shopping for their needs.
David G. Dietze, Senior Portfolio Strategist at Peapack Private Wealth Management, joins Yahoo Finance Live anchors Seana Smith and Diane King Hall to give his reaction to FedEx’s earnings report. JoAnne Feeney, Advisors Capital Management partner and portfolio manager, joins ‘Squawk Box’ to discuss where markets could see earnings results similar to FedEx, her thoughts on Lennar, and more. FedEx plans to remove 29 aircraft from its fleet this year through permanent retirement and temporary storage, fulfilling its new program to eliminate permanent costs and make its logistics network mo… FedEx Corp. ( FDX , Financial) is undergoing a significant transformation with its DRIVE initiative to create a more efficient global logistics network.
FedEx: Consumers Shifting Spending From eCommerce to Entertainment and Services
To counteract the slowdown, FedEx said it would cut back on flights, reduce its Sunday operations at some locations, freeze hiring and close more than 90 locations. FedEx also said it would eliminate five corporate offices, part of a broader review of its real estate holdings. “We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations,” Raj Subramaniam, FedEx’s chief executive, https://forex-world.net/strategies/3-successful-forex-trading-strategies/ said in a statement. Factors affecting FedEx’s business included “macroeconomic weakness in Asia and service challenges in Europe,” the company said in the statement. Among the potential risks to future business, FedEx cited the war in Ukraine and the continuing effects of the coronavirus pandemic. FedEx introduced cost-savings measures like employee buyouts in response to last quarter’s challenges, and Atkins expects more cost cuts to be announced.
The company said it expects to earn $3.44 per share in the quarter, well below analyst expectations for $5.14 per share in earnings. I believe Wall Street is reacting positively to the recent strategic initiatives introduced by the company as FedEx is now beginning to focus more on profitability, leaning away from its prior strategy of gaining market share at any cost. Today, FedEx is taking a step back to focus more on earnings, and this approach is likely to fetch more positive earnings revisions for the next fiscal year (2024).
S&P 500 has closed below its 200-day for the longest time since the Financial Crisis
The Treasury market appeared to calm down in midday trading after a volatile week. While that projected earnings number has slowly slipped in recent months, it still shows more growth than a recession could likely support, suggesting that some harsh cuts could be in the pipeline. As fears of a recession began to rise this summer, many portfolio managers and strategists have predicted that projected earnings growth for 2023 will prove to be too high. There’s nothing to suggest this is a permanently crippling issue for FedEx, and investors with a long time horizon might note the stock is significantly cheaper than it was in early September. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
- Helane Becker, an analyst with Cowen, said, “We suspect that headwinds from an inflation-fatigued U.S. economy, a resource-constrained European economy, and second-order effects from lockdowns in China proved too much to overcome.”
- E-commerce businesses require seamless integration with logistics providers, real-time tracking, and flexibility in delivery options.
- The Dow Transports’ performance is particularly notable because the index is deemed a leading indicator for the economy’s trajectory.
- Among the potential risks to future business, FedEx cited the war in Ukraine and the continuing effects of the coronavirus pandemic.
- The markets struggled across the board this week, but not all stocks were hit equally.
FedEx’s move followed remarks from the World Bank and the IMF, both of which warned of an impending worldwide economic slowdown. Stockchase rating for FedEx is calculated according to the stock experts’ signals. A high score means experts mostly recommend to buy the stock while a low score means experts mostly recommend to sell the stock.
Which Stock Is A Better Pick For The Next Three Years – FedEx Or UNH?
In the last 3 months, Fiscal 2023 EPS estimates have been revised positively 27 times with no negative revisions. The e-commerce industry has a direct impact on delivery companies such as FedEx, as the two industries are closely intertwined. The continued growth of e-commerce has significantly changed the landscape of the logistics and delivery industry, with increased demand for fast, reliable, https://currency-trading.org/cryptocurrencies/ramp-crypto-price-prediction/ and efficient shipping services. For the Q4 results late Tuesday, FedEx reported a 28% earnings drop to $4.94 per share while revenue fell 10.2% to $21.9 billion. FactSet analysts expected earnings diving to $4.85 per share on $22.55 billion in sales. A Raymond James note early Tuesday said the initiative will drive better margins, earnings and free cash flow in the coming years.
Traders fear that a global economic slowdown would cut demand for oil and other petroleum products. FedEx announced late Tuesday its earnings fell 28% in Q4, vs. an average 27% over the prior three quarters. The company’s sales declines accelerated for a third straight quarter, and for a third consecutive period missed Wall Street views. “While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives.” As an economic bellwether, FedEx’s troubles are a gloomy sign for the U.S. economy, which has sent mixed signals to analysts trying to diagnose its health. Inflation remains high, and job growth has slowed, but demand for workers continues to be strong amid increased consumer spending in sectors including travel and restaurants.
“They’re not collapsing, but they are declining,” said Amit Mehrotra, an analyst at Deutsche Bank, adding that it needs to navigate the current slowdown with “very, very good cost management.” It operates in more than 200 countries, and the Memphis-based company’s half a million employees process more than 15 million shipments every day. FedEx also says it faces “service challenges” in Europe, where a recession looks likely, and “macroeconomic weakness” in Asia, which continues to struggle from strict COVID lockdowns, as well. Staggering past the finish line of a week rattled by inflation concerns, looming interest rate hikes and ominous economic warning signs, the S&P 500 and the Nasdaq suffered their worst weekly percentage plunges since June. “More and more companies are warning on their profits, lowering down expectations for the remaining part of the year and next year,” Giuliano Gasparet, head of equity at Generali Insurance Asset Management, said in a note.
The DRIVE transition, focus on trimming costs and capital allocation, along with a shareholder-friendly capital return program should improve returns, the firm wrote. Raymond James lowered its price target on FedEx stock to 280 from 285 but maintained the outperform rating on shares. FedEx shares lost nearly one-quarter of their value on a single day in mid-September after preannouncing results for its fiscal first quarter ending Aug. 31. The company earned $3.44 per share in the period, well below analyst expectations for $5.48 per share, and said it was withdrawing guidance for the full fiscal year due to the uncertain economic environment.