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Bear of the Day: FedEx (FDX)

David Bartosiak

The market is in full on beast mode right now. Stocks are rocketing to new highs every day and it feels like you can do no wrong. Eventually, this too shall pass. The market is going to become more discriminatory when things get rough. When the going gets tough, you are going to want to have stocks with strong earnings trends. Prices may reverse quickly, but earnings trends tend to stay in place for extended periods of time. Today’s Bear of the Day is a stock you may believe has a strong earnings trend but the fact is, it does not.

I’m talking about Zacks Rank #5 (Strong Sell) FedEx (FDX). FedEx Corporation provides transportation, e-commerce, and business services worldwide. The company's FedEx Express segment offers shipping services for delivery of packages and freight. Its FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services; and consolidates and delivers low-weight and less time-sensitive business-to-consumer packages. The company's FedEx Freight segment offers less-than-truckload and other freight delivery services. As of May 31, 2019, it operated approximately 28,000 vehicles and 373 service centers. 

I was surprised to see that over the last sixty days, twelve analysts have cut their earnings estimates for the current year while ten have followed suit for the next year. That’s pushed down our Zacks Consensus Estimate for the current year from $12.07 to $10.84 while next year’s number is off from $13.75 to $12.41.

These negative earnings estimate revisions came well before the coronavirus scare. Several companies have since come out and warned about profits being harmed by the scare. That’s surely going to make a negative impact on FedEx as well.

The Transportation – Air Freight and Cargo industry ranks in the Top 44% of our Zacks Industry Rank. There is only one Zacks Rank #1 (Strong Buy) in the industry currently, that’s Atlas Air Worldwide Holdings (AAWW). There are several Zacks Rank #3 (Hold) stocks to explore, including Avianca Holdings (AVH).

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FedEx Corporation (FDX) : Free Stock Analysis Report
 
Avianca Holdings S.A. (AVH) : Free Stock Analysis Report
 
Atlas Air Worldwide Holdings (AAWW) : Free Stock Analysis Report
 
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