U.S. stock economic leading indicators? FedEx lowers guidance for three consecutive quarters
As an economic barometer, FedEx is closely watched due to its extensive exposure to various sectors of the global economy. FedEx's adjusted earnings per share are expected to reach between $18 and $18.60 for the current fiscal year, lower than the analysts' average estimate of $18.95. The company also warned that revenue may decline slightly compared to the previous year
FedEx again lowers profit expectations, economic difficulties sound alarm bells for investors.
On March 20th, Eastern Time, FedEx released its third-quarter results after the market closed, lowering its full-year performance guidance for the third consecutive quarter. The adjusted earnings per share are expected to reach between $18 and $18.60 for this fiscal year, below the average analyst estimate of $18.95. The company also warned that revenue may decline slightly compared to the previous year.
As an economic barometer, FedEx is closely watched due to its extensive exposure to various sectors of the global economy. FedEx CEO Raj Subramaniam stated during a conference call with analysts:
Inflation exceeding expectations this quarter is putting pressure on costs.
The market reacted quickly after the earnings report, with FedEx's stock price dropping more than 5% in after-hours trading in New York. As of Thursday's close, the stock has fallen 12% this year.
Economic barometer shows warning signals, FedEx seeks change
FedEx's third-quarter results showed earnings per share of $4.51, also below Wall Street's estimate of $4.57. CEO Subramaniam pointed out:
The company faced a "very challenging" operating environment during this period, including a shorter shipping peak season and adverse weather conditions.
Additionally, due to customers' tightening funds, there is an increasing tendency to opt for slower, cheaper delivery methods instead of more profitable express services, leading to a prolonged weakness in the entire industry. Meanwhile, package volumes are also affected by the anticipated expiration of contracts with the United States Postal Service (USPS).
Declining consumer confidence and potential risks from the Trump trade war have also impacted the company. Nevertheless, FedEx stated that its latest outlook assumes that the global economic, political, and trade environment will not deteriorate further.
CEO Subramaniam mentioned efforts to merge the air freight delivery segment with its ground delivery network to transform the company. At the same time, it is advancing plans to spin off the freight division into an independent publicly traded company. This move aims to streamline the company's operations, allowing it to focus on its core package business