Headline of the week: FedEx. Analysis and forecasts

FedEx (FDX.US) released its fiscal second quarter 2024 earnings report on Tuesday after the close of the market session.
The disappointing earnings triggered a collapse in stock prices during Wall Street trading on Wednesday.
Yesterday, stocks suffered their biggest daily decline in 15 months.
In this article, in collaboration with XTB experts, we take a quick look at the company's earnings and its valuation.
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Check out XTB's offering FedEx fell more than 12% on Tuesday.
The decline was triggered by the disappointing release of fiscal second quarter 2024 earnings.
Company missed revenue and profit expectations.
Express unit margins decline significantly.
Share price fell below the $250 support zone.
FedEx Earnings Disappoints Market FedEx released its fiscal second-quarter 2024 earnings report Tuesday after the close of the Wall Street session.
The report turned out to be worse than expected, with revenues and, more importantly, profits disappointing compared to expectations.
Although sales were lower than a year earlier, profits increased compared to the year-ago quarter.
However, this was the first adjusted EPS loss since Q1 fiscal 2023 (calendar June-July 2022).
However, it was the revised forecast for the full fiscal year 2024 that was the main source of concern for investors.
While its adjusted EPS and capital expenditure forecasts were in line with market expectations, FedEx no longer expected fiscal 2024 revenue to be “more or less flat” and instead expects it to decline “to a low figure." Fiscal Q2 2024 Results Revenue: $22.2B vs.
$22.41B Expected (-2.8% YoY) Adjusted EPS: $3.99 vs.
$4.19 Expected ($ 3.18 a year ago) Adjusted operating profit: $1.42 billion vs.
$1.49 billion expected (+13.6% year over year) Adjusted operating margin: 6.4% vs.
6.6% expected (5.4% one year ago) Full-year fiscal 2024 forecast Adjusted EPS: $17.00-18.50 versus $18.22 forecast (unchanged) Capital expenditures: $5.7 billion versus to $5.7 billion expected (unchanged) Revenue growth: “low single-digit decline” compared to “nearly flat” in previous forecast FedEx earnings releases for the past 20 quarters.
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Invest in stocks now with XTBFedEx posts biggest daily drop in 15 months The report was seen as a major disappointment, with revenue continuing to fall as volumes fell.
The forecast for the full fiscal year was also seen as a disappointment.
Performance results from FedEx's Express unit, the company's largest by sales, were particularly disappointing, with operating margin worsening from 3.1% in fiscal 2023's second quarter to 1.3% in the fiscal second quarter of 2024.
The unit had margins as high as 8.7% during quarters characterized by pandemic-hit supply disruptions.
The disappointing performance of the Express unit could be a sign of changing trends with customers appearing to sacrifice ultra-fast delivery times for cheaper delivery prices.
However, the drop in demand is not offset by the drop in costs, as the company still needs to operate and maintain a fleet of aircraft.
Given this, a downsizing of the Express unit cannot be ruled out if the trend proves to be more persistent.
Given the troubling outlook explained above, a sharp drop in FedEx's stock price should come as no surprise.
In fact, it was the biggest daily drop in the company's shares in 15 months.
Source: Bloomberg Finance LP, XTB Research FedEx (FDX.US), a look at the chart Taking a look at the FedEx (FDX.US) D1 chart, we can see that this week's decline has been very notable.
The price collapsed from the $280 resistance zone, marked by the 78.6% retracement of the downtrend that began in 2021, and moved below the $250 support, at the 61.8% retracement.
Furthermore, it attempted to climb back above the $250 zone after the start of Wall Street's cash session, but failed and the stock ended the session at daily lows.
Key short-term levels to watch in case the pullback continues are the $245 area, marked by the 200 session moving average (purple line), as well as the $240 area, marked by the lower limit of the Overbalance structure.
A move above the $240 area would mean, at least in theory, that the uptrend is over and the stock is now in a downtrend.
Should we see attempts to recover the dips, the aforementioned $250 resistance will become a level to keep an eye on.
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