FedEx (FDX) Potential Better EPS Even Though Revenue Might Suffer Decline
$FedEx(FDX)$ is expected to release earnings on 21 Mar 2024 after the market closes (AMC). It is expected to show a fall in quarterly revenue when it reports results on 21 March for the period ending 29 Feb 2024.
Market is expecting FedEx to report a 0.5% decrease in revenue to $22.057 billion from $22.17 billion a year ago, according to the mean estimate from 16 analysts, based on LSEG data.
Over the last few days, market seem to be in buying sentiment towards FedEx, but the increase is too little, we could be seeing some movement closer to the earnings.
FedEx (FDX) Last Reported Earnings
FDX last reported earnings on 19 Dec 2023 after the market close (AMC). FDX shares declined -12.1% the day following the earnings announcement to close at 245.01. Following its earnings release, 91 days ago, FDX stock has drifted +4.7% higher. From the time it announced earnings, FDX traded in a range between 233.27 and 258.21. The last price (256.62) is closer to the higher end of range.
This last earnings was the time when FedEx has a negative EPS surprise, based on what FedEx have been going through, the economic headwinds might be something that could prevent FedEx to have any increase in revenue.
If revenue decrease is not greater than 0.5%, there might be a chance of a EPS surprise.
Estimated implied straddle for upcoming earnings is 5.9%. I am hoping to see FedEx going back to positive price effect as there should be a better-than-expected EPS despite revenue might drop by 0.5%.
Cost cutting by FedEx in 2023 should have some effect on the earnings.
FedEx (FDX) Implied Volatility (IV) vs Historical Volatility (HV)
FDX implied volatility (IV) is 33.1, which is in the 90% percentile rank. This means that 90% of the time the IV was lower in the last year than the current level. The current IV (33.1) is 3.2% above its 20 day moving average (32.1) indicating implied volatility is trending higher.
FDX IV vs 20-Day HV
The current IV (33.1) in FDX is 85.1% above its 20 day HV (17.9) suggesting that options markets are predicting future volatility to trade above the most recent 20 day realized volatility.
FedEx (FDX) Price target
Price forecast for FedEx have a maximum estimate of 337.00 and a minimum estimate of 195.00.
FedEx (FDX) Hedge Fund Holdings
We might want to take note of the decrease in hedge funds holdings for FedEx over the last quarter, I am monitoring to see if there are more hedge funds loading up after its latest earnings.
Summary
Based on how FedEX have performed in the last quarter, I would think investors are wary about how FedEx would be navigating the tight market amidst declining demand.
I have some friends who are in logistics delivery business, the trend have moved towards creating their own supply chain for medium to large businesses. This is where most of FedEx customer base is.
Hope FedEx have something new to propel its other area of business.
Appreciate if you could share your thoughts in the comment section whether you think FedEx would be able to provide a positive price effect after its upcoming earnings?
@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.
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