Talking Numbers

This Stock Has A Secret Asia Problem

Talking Numbers

As FedEx reports its quarterly earnings, will a slump in Asian trade hurt its business?

FedEx will be reporting its second quarter earnings Wednesday morning. However, the company’s investors should pay close attention to Asia’s trade slowdown, according to one trader.

Analysts expect FedEx’s revenues for the quarter to be $11.44 billion, 4% higher compared to the previous year. The company’s per share earnings are expected to be $1.96, about 1.5% lower than the previous year.

Talking Numbers contributor Enis Taner, Global Macro Editor at RiskReversal.com, believes the company will have tougher times ahead. Though a majority of the company’s revenues come from the United States, its fastest growing business has been in what they call “international domestic”. In 2012, it was up 31%. Though the company has cited waning Asia demand as one of the reasons it missed estimates, Taner believes this falling demand will be a bigger threat to the stock than the market currently anticipates.

“We’ve seen global macro economic data continue to weaken,” says Taner. “And, international deliveries are the reason FedEx was able to rally all the way up to $110.”

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, disagrees and says the charts are on his side. “We already saw a big earnings miss last quarter,” Ross says on FedEx’s price peak earlier in the year. “That’s bar is lower. You could literally fall over it at this point. I like FedEx ahead of earnings.”

Who has the more compelling argument: Taner on the fundamentals or Ross on the technicals? Watch the video above and weigh in on the comments below.

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