FedEx Stock Drops 10% on Q2 Earnings Miss

FedEx (NYSE:FDX) experienced a significant 10% drop in its stock price, following a disappointing Q2 earnings report and a downward revision in its revenue forecast. This decline reflects broader challenges within the logistics industry, particularly in the face of a weaker holiday season.

Key Financials:

• Q2 Earnings: Reported at $3.99 per share, falling short of the $4.19 consensus estimate.
• Revenue: $22.2 billion, slightly below the expected $22.37 billion.

CEO's Perspective:
Despite the revenue miss, CEO Raj Subramaniam emphasized the company's operational growth and margin expansion amidst challenging demand conditions. However, FedEx's outlook remains cautious, with expectations of a low-single-digit percentage decline in revenue year-over-year for fiscal 2024. The anticipated EPS for 2024 is now set between $17.00 and $18.50, compared to the previous consensus estimate of $18.25.

Market Reaction:
The announcement led to an 8.5% decline in FedEx's shares in extended trading, also negatively impacting shares of its rival, United Parcel Service (UPS), which fell by 2.6%. The market's reaction underscores concerns about the delivery industry's performance during the critical holiday shipping season.

Cost-Cutting and Efficiency:
FedEx is focusing on cost-cutting measures and operational efficiency. Plans include combining its Express and Ground delivery units and repurchasing an additional $1 billion of common stock during fiscal 2024. These strategies aim to mitigate the impact of reduced revenue and maintain profitability.

Sources: Investing.com | The Sun/Reuters