To The Moon

$FedEx(FDX)$ is set to report earnings on 19 Dec after market close. FedEx is expected to report declining revenue of nearly 2% to $22.4 billion in yet another quarter, but the consensus estimates for EPS (Earnings Per Shares) does jump by 32% to $4.19.

FedEx has missed consensus revenue estimates for the last 6 quarters, the stock has also traded volatile during the period, but the trend has been for the annual revenue declines to improve with a shift back towards growth over the holiday period pushing FedEx higher.

Based on the last 3 quarter we have seen that there are 2 out of 3 positive price effect even though the revenue failed to surprise, but we do have EPS giving 3 out of 3 surprises.

FedEx (FDX) Upcoming Earnings Guidance

FDX has issued earnings guidance for FY 2024. EPS estimate in the range of 15.10 to 16.60. FedEx has rallied on the backs of constantly missing revenue targets. If FedEx finally beats estimates, the stock could have even more upside.

FedEx (FDX) Last Reported Earning (20 Sep 2023)

FedEx shares gained +4.5% the day following the earnings announcement on 20 Sep 2023 to close at $260.62.

Following its earnings release, 89 days ago, FedEx stock has drifted +8.2% higher. From the time it announced earnings, FedEx traded in a range between 223.63 and 285.53. The last price (281.92) is closer to the higher end of range.

We have a 5.1% Implied Straddle and create a price effect of +4.5% after its latest earnings announcement on 20 Sep 2023.

FedEx (FDX) Historical Moves Ahead of Earnings

FedEx stock had mixed performance leading up to earnings. Shares of Fedex traded lower, on average, in the two weeks, one week, and two day periods heading into an earnings report.

The best performance was three days ahead of earnings for an average gain of 0.2%

FedEx (FDX) Historical Stock Price Reaction to Earnings

FedEx shares have moved higher in the immediate aftermath of earnings 7 out of 12 previous reports. On average the stock moved up 0.8% in the first day of trading after the company reported earnings.

FedEx (FDX) Stock Behavior After Earnings

Based on the previous 12 earnings releases, FedEx is more likely to trade lower 1 day after earnings for an average loss of -0.3%

FedEx (FDX) Post Earnings Announcement Drift

FedEx share price has drifted up 8.2% post earnings announcement. Using the last 12 quarters data, the average drift between earnings announcements is 1.4%. The current drift represents a positive 0.5 standard deviation move.

• Current post earnings announcement drift: 8.2%

• Historical average post earnings announcement drift: 1.4%

• Historical post earnings drift standard deviation move: ±15.5%

FedEx (FDX) Post Earnings Movement

The options market overestimated FedEx stocks earnings move 67% of the time in the last 12 quarters. The predicted move after earnings announcement was ±6.0% on average vs an average of the actual earnings moves of 5.0% (in absolute terms).

FedEx (FDX) Earnings Implied Volatility Crush

FedEx's last earnings implied volatility (IV30) going into earnings was 30.5. The last time FedEx released earnings, the implied volatility dropped to 22.6, resulting in an implied vol crush of 26%.

5 days after earnings, the 30 day IV was 22.1.

• Average Implied Volatility Crush For FDX Earnings: 26%

• Average 30 Day Implied Volatility 1 Day Before Earnings: 41.6

• Average FDX 30 Day IV for the Day of Earnings: 30.7

• Average 30 Day Implied Volatility 5 Days After Earnings: 28.8

FedEx (FDX) IV Percentile Rank

FedEx implied volatility (IV) is 30.1, which is in the 69% percentile rank. This means that 69% of the time the IV was lower in the last year than the current level. The current IV (30.1) is 1.1% above its 20 day moving average (29.8) indicating implied volatility is trending higher.

FedEx (FDX) IV vs 20-Day HV

The current IV (30.1) in FedEx is 52.6% above its 20 day HV (19.7) suggesting that options markets are predicting future volatility to trade above the most recent 20 day realized volatility.

FedEx (FDX) Seasonal Volatility by Day of Year

Historically, implied volatility for FedEx tended to rise the most in December with a median IV Of 31.0, while July tended to be when implied volatility declined To its lowest levels With median IV Of 20.9.

Historically, the median IV for the current month of December was 31.0 compared to the current IV of 30.1. The IV level in January following December tended to be lower, with a median IV of 24.5.

FedEx (FDX) Volatility Skew

The current skew indicator is suggesting a bullish signal.

The implied volatility skew shows the market's bias for pricing in volatility risk to the option premium of downside puts and upside calls. The implied volatility for downside puts is decreasing relative to upside calls, then that suggests the market is pricing in a more positive sentiment for upside move.

Summary

Based on the data we have gathered, FedEx though will post a declining revenue, but EPS estimate is poised to surprise, this could mean more upside is FedEx could beat both revenue and EPS estimate in the upcoming quarter reporting.

FedEx share price has rallied even though it constantly missed the revenue target. I will be monitoring to load more stocks when there is a slight pullback during trading today (19 Dec).

Appreciate if you could share your thoughts in the comment section whether you think FedEx would be able to beat both revenue and EPS estimate, and it is time for FedEx to rally with more upside.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.