FedEx Earnings Preview: 8% Stock Price Move Expected
FedEx Earnings Preview: 8% Stock Price Move Expected
By:Mike Butler
Last quarter, FedEx Ground & FedEx Freight lead the way in performance while FedEx Express fell short
FedEx is set to report quarterly earnings after the stock market closes on Thursday.
The company is expected to announce earnings-per-share of $4.82 on $21.95 billion in revenue.
Both estimates are lower than last quarter's results, which exceeded expectations.
After the last earnings call the stock price skyrocketed on a strong operating income and profit margin for FedEx Freight and FedEx Ground.
FedEx Earnings Preview
FedEx (FDX) will look to build on last quarter's success when it reports quarterly earnings after the stock market closes on Thursday. After beating both earnings-per-share (EPS) and revenue estimates for Q2, FedEx now has a lower bar to reach with a reduced EPS estimate of $4.82 on $21.95 billion in revenue.
Last quarter, FedEx Ground & FedEx Freight lead the way in performance while FedEx Express fell short. With that said, the stock price still rallied aggressively from $256.38 to a high of $296.86 the next trading session—a one-day return of over 15%. The stock price currently sits at $298 after opening the year at $251.51, up over 18% in 2024.
Raj Subramaniam, FedEx president and CEO, offered strong positive sentiment in the last earnings call.
“We made significant progress in fiscal 2024 and ended the year strong, delivering four consecutive quarters of expanding operating income and margin in a challenging revenue environment,” he said.
Those achievements can be attributed to the company’s initiatives and to great customer service, he maintained.
“These results are unprecedented in this current environment, reflecting our continued execution of our DRIVE initiatives and our resolve to transform FedEx while we deliver outstanding service to our customers,” Subramaniam continued. “We expect this momentum to continue in fiscal 2025 as we advance our efforts to create the world’s most flexible, efficient, and intelligent network."
For this earnings call, implied volatility is telling us we should expect a stock price range of +/- $23.76 for the week, which is about 8% of the current stock price. Implied volatility is a contextual metric derived from the options market, and relates specifically to options prices.
The higher options prices are relative to the stock price, the more movement we can expect to see from a stock price. This week's expected move is on the higher end of the range for earnings announcements, which typically land at 5%-10% of the notional value of the stock price.
Looking out to January 2025, we see current implied volatility is giving us a stock price range of +/- $39.20. This week's earnings announcement makes up for over half of that expected range, which means the market is placing a lot of weight on the earnings results this week.
Bullish on FedEx stock for earnings
Investors bullish on FedEx earnings are looking for more efficiency improvements for FedEx Ground, Freight and Express. Earnings results have been mixed over the past year, but the logistics company is coming off a strong performance with lowered expectations this time around. If FedEx can exceed expectations yet again, we could see the stock price rally after earnings.
Bearish on FedEx stock for earnings
FedEx bears are looking for an earnings miss after the big rally last quarter. If sentiment is softened and the earnings report seems weak, we could see the stock price fall. There is still a lot of uncertainty in the general economy, and traders may be weary of investing in a stock that just flubbed an earnings report with a stock price near all-time highs.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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