Reports of Fuel Spikes Hurting FedEx (FDX) are Vastly Overblown
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Price: $100.05 +1.12%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 0.5%
Revenue Growth %: +4.2%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 0.5%
Revenue Growth %: +4.2%
Trade FDX Now!
FedEx (NYSE: FDX) shares moved higher over Wednesday's session following a positive report in the WSJ this afternoon.
Many investors and traders have been keeping an eye on the parcel delivery service sector following the recent surge in crude prices. Funny enough, shares of FedEx have kept relatively on the up-and-up through March, now about 9.6 percent higher since earlier in the month.
Unlike airlines which hedge fuel prices ahead of the fact, companies like FedEx and peer United Parcel (NYSE: UPS) create a predictable set of surcharges which are passed on to customers in the event of volatile crude prices.
Amid such concerns, the WSJ said strength in package volume -- as well as a strong holiday season for e-Commerce -- will avert any expected erosion in EPS estimates. The Street is currently at $1.36 for FedEx's upcoming report.
The song is the same as last year, when analysts made similar claims only to be thwarted by FedEx's actual numbers. The shipper reported EPS of 81 cents on revs of $9.66 billion, largely in-line with expectations.
Aside from specific issues with FedEx, the larger picture on increased energy costs could still resonate. With a slowdown in China expected for 2012 -- what would be a significant impact on FedEx and UPS alike -- focus now lies on how price-sensitive airfreight will be impacted.
UPS recently announced the multi-billion acquisition of TNT Express, giving it a firmer footprint in Europe. However, FedEx made a strategic investment in a new set of Boeing aircraft to bolster its trans-Pacific flights.
So as long as investors remain comfortable with fuel prices and limited consolidation to global growth prospects, FedEx should continue taking to the skies, returning plenty to shareholders along the way.
The stock closed up 1.25 percent, off of intraday highs.
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Many investors and traders have been keeping an eye on the parcel delivery service sector following the recent surge in crude prices. Funny enough, shares of FedEx have kept relatively on the up-and-up through March, now about 9.6 percent higher since earlier in the month.
Unlike airlines which hedge fuel prices ahead of the fact, companies like FedEx and peer United Parcel (NYSE: UPS) create a predictable set of surcharges which are passed on to customers in the event of volatile crude prices.
Amid such concerns, the WSJ said strength in package volume -- as well as a strong holiday season for e-Commerce -- will avert any expected erosion in EPS estimates. The Street is currently at $1.36 for FedEx's upcoming report.
The song is the same as last year, when analysts made similar claims only to be thwarted by FedEx's actual numbers. The shipper reported EPS of 81 cents on revs of $9.66 billion, largely in-line with expectations.
Aside from specific issues with FedEx, the larger picture on increased energy costs could still resonate. With a slowdown in China expected for 2012 -- what would be a significant impact on FedEx and UPS alike -- focus now lies on how price-sensitive airfreight will be impacted.
UPS recently announced the multi-billion acquisition of TNT Express, giving it a firmer footprint in Europe. However, FedEx made a strategic investment in a new set of Boeing aircraft to bolster its trans-Pacific flights.
So as long as investors remain comfortable with fuel prices and limited consolidation to global growth prospects, FedEx should continue taking to the skies, returning plenty to shareholders along the way.
The stock closed up 1.25 percent, off of intraday highs.
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