Stock price has been hanging in the $106 to $110 range for a very long time, but I remain hopeful of an upward swing. This is another anecdote for people not to put all your eggs in one basket. Diversify.
From Financial Times 06/20/07:
FedEx, the package delivery group, said it expected the weak US economy to pick up in the late summer or early autumn, as it reported poor fourth-quarter earnings that undershot Wall Street expectations.
"We were restrained by a slowing US economy," said Fred Smith, FedEx chairman, president and chief executive. "The weakened industrial sector is currently limiting demand for transportation services."
Net earnings grew 7 per cent to $610m, or $1.96 per share, in the three months to the end of May.
But excluding a 6 cent boost from a settlement with Airbus over the cancellation of a plane order, earnings missed the $1.96 per share expected by Wall Street analysts, according to Reuters estimates.
Revenue was up 8 per cent from last year at $9.15bn.
FedEx is viewed as an economic bellwether because of its extensive transport and delivery network throughout the US, with companies and individuals tending to send fewer packages as conditions worsen.
"We're looking forward to a pick-up, even if it's a slight pick-up, in the fall," said David Bronczek, head of FedEx's express division, its largest.
FedEx results were hit by a drop in US revenues and volumes in express delivery, as the cost of fuel rose and customers moving to cheaper services offset price increases.
The company said it did not expect any improvement in express volumes this year.
Operating income grew 30 per cent in ground transport, as customers shifted from more costly express delivery, where operating income grew 6 per cent.
In freight transport, operating income was down 12 per cent.
The domestic transport and freight industry is struggling in the US.
"The environment is worse than what it was at the low point of the last recession in 2001," said Rick Paterson, UBS analyst. "We are essentially in a domestic freight recession."
FedEx expects earnings in the next quarter to be $1.45 to $1.60 per share, and earnings for this financial year to be $7 to $7.40 per share assuming the US economy improves and oil prices do not rise.
Investors were heartened by FedEx's optimistic economic outlook and earnings prediction, which covered the consensus forecast of $7.33.
"Many people thought they might reduce their guidance more than they did," said James Corridore, an analyst at Standard & Poor's. Shares in FedEx had risen 1.61 per cent to $109.80 by the close.
Earnings growth is expected to miss the company's long-term 10 per cent to 15 per cent earnings growth target because of soft economic growth and the cost investments, the company said. Net income for the year was $2.02bn, up 12 per cent, on a 9 per cent rise in revenue to $35.2bn.