FedEx is the IBD Stock Of The Day as it flashes a bullish signal ahead of a potential breakout, following the shipping giant's beat-and-raise quarterly report. Further, FedEx stock has staged a strong rally so far this year.
On Sept. 20, the parcel delivery service beat earnings estimates and lifted its EPS guidance. FedEx earnings jumped 32% for the fiscal first quarter, following four quarters of double-digit declines. But the company missed revenue targets.
FedEx CEO Raj Subramaniam said his company's turnaround strategy is starting to deliver improved results.
FedEx Stock Rises Near Buy Point
Shares of FedEx advanced 2.1% to 266.43 on the stock market today.
FedEx stock is less than 2% below a 270.95 buy point from a flat base, which has formed around a rising 50-day moving average.
The shipping stock jumped above the 50-day average on earnings last week. It's well above an uptrending 200-day line. Investors could use last week's post-earnings high of 268.38 as an early entry.
The relative strength line for FDX stock struck a two-year high Monday, a highly bullish sign ahead of a potential breakout. That is marked by a blue dot at the end of its RS line on the daily and weekly MarketSmith charts.
Stocks were narrowly mixed overall Monday, as Treasury yields continued to soar. The market is in a correction.
FedEx stock has a Composite Rating of 81 out of 99. The Composite Rating combines various technical indicators into one easy-to-read score.
However, FedEx stock earns an RS Rating of 95. That is up from 92 a week ago and 84 three months ago.
FedEx Earnings Jump, Snapping Series Of Declines
A mediocre EPS Rating of 71 reflects recent earnings declines for FedEx stock.
But for its latest quarter, FedEx posted an adjusted earnings increase of 32.3% to $4.55 per share, well above FactSet analyst estimates of $3.71 per share. Notably, the earnings increase followed declines above 20% in each of the preceding four quarters. Revenue fell 6.5% to $21.7 billion, just shy of forecasts of $21.74 billion.
The company's ground delivery business saw operating income jump 59% during the quarter due to cost and productivity improvements.
FedEx Express' operating income increased 18% for the period due in part to flight reductions.
Its freight segment reported a 26% decline in operating income, driven by lower fuel surcharges and shipments.
FedEx also completed the planned closure of 29 terminal locations in August.
FDX: Rising Outlook
For fiscal 2024, FedEx now expects flat year-over-year revenue vs. its prior guidance of flat to low-single-digit sales growth. But FedEx guided adjusted earnings of $17 to $18.50 per share, vs. its previously expected adjusted earnings of $16.50 to $18.50 per share.
FactSet analysts now expect full-year FedEx earnings to rebound nearly 21% as revenue dips 0.9%. They expect FDX earnings to rise an additional 23% next year as revenue grows almost 5%. FedEx's fiscal year ends in May.
Amid hopes for an earnings and revenue comeback, FDX stock has rallied almost 54% so far this year.
UPS gained Monday after hitting a three-year low intraday. It's down nearly 11% year to date. Growing delivery rival Amazon also rose Monday and is up 56% year to date.
