Shares of FedEx are down 3.5% after hours following earnings.
EPS of $4.94 beat the $4.83 estimate but the company was light on revenue. It's also forecastings earnings for its 2024 fiscal year (which started June 1) that are below estimates.
For the broader economy, what's most concerning is that FedEx sees flat to low-single-digit-percent revenue growth year over year in the fiscal years that started in June. It's also using cost cutting as a lever to improve profitability.
“We’re approaching fiscal 2024 with the same level of intensity, maintaining a continued focus on improving profitability to position the company for success in what remains a challenging demand environment," said Michael Lenz, FedEx chief financial officer, in the release.
Some of the pain might be due to competition from Amazon but there are certainly reasons for economic caution here. How much of that is already baked in to broader markets? I would suspect that the bulk already is but the drop in FedEx shares shows that it's not all there.
FedEx is considered an economic bellwether due to its integral role in various sectors. Its operations touch industries from retail and e-commerce to manufacturing, making its performance indicative of broader economic health. As online shopping is tied to consumer spending, FedEx's volume of business can suggest the levels of consumer confidence and purchasing power. Additionally, as FedEx is involved early in the supply chain, changes in its operations can provide early signals of economic shifts.
