- FedEx (NYSE:FDX) shares fell 7% in pre-market trading on Wednesday after reporting earnings that missed analysts' and the company's own expectations, citing macroeconomic weakness.
- Shares have come under pressure in recent months as Amazon (NASDAQ:AMZN) is being increasingly viewed as a viable threat to the logistics company.
- Last quarter, the company cut its 2019 forecast, citing economic uncertainty around the world.
- Watch FedEx trade live.
Shares of delivery giant FedEx fell 7% in pre-market trading on Wednesday after once again reporting quarterly earnings that fell short of expectations. The company blamed performance on a slowing global macroeconomic environment.
"Our third quarter financial results were below our expectations and we are focused on initiatives to improve our performance," said Frederick Smith, the company's chairman and CEO, in a statement out on Tuesday.
Here's what FedEx reported, compared with what Wall Street analysts surveyed by Bloomberg were expecting.
- Adjusted earnings per share (EPS): $3.03 versus $3.12.
- Revenue: $17 billion versus $17.66 billion.
"Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue," said Alan Graf, Jr., the company's executive vice president and CFO.
Last quarter, FedEx slashed its earnings forecast, citing economic uncertainty in Europe and Asia. FedEx Express said it would not achieve its operating income goal of $1.5 billion by fiscal 2020.
Over the last year, FedEx shares have come under significant pressure, falling 33%, as analysts have grown increasingly worried that Amazon's efforts in the logistics space were a viable threat.
"We could have cut and paste this opening sentence from our notes over the last several Qs, as results continue to disappoint due to a plethora of negative items," including weaker revenue trends, wrote Deutsche Bank (DE:DBKGn) analysts led by Amit Mehrotra in a note to investors on Tuesday.
Still, the firm "defended" shares, and maintained its positive view of the stock — "albeit fully understanding of investors' frustration with lack of progress" — due in part to the view that it's a good value.
Indeed, FedEx's relatively low valuation has recently gained attention as investors "debate the company's path forward on earnings," said Barclays (LON:BARC) analyst Brandon Oglenski in a note to clients sent out on Monday.
Shares are currently trading at 10 times forward earnings, versus the S&P 500's ratio of just over 16 times. In other words, the stock may be viewed as cheap relative to the broader market.
"While we agree valuation is tempting, management will have to provide a clearer picture for improving European results while also dealing with slower global demand and a likely higher capital spending outlook," Oglenski wrote.
Now read more FedEx coverage from Business Insider:
- Amazon took over the $176 billion market for cloud computing. Now it's using the same playbook in logistics.
- The internet is obsessed with a FedEx employee who cruised through Manhattan on a delivery cart — but FedEx says the speed-meister broke company standards
- FedEx's new service delivers online orders hours after they're placed — and it shows that Amazon Prime isn't special anymore