FedEx Comes Clean, and Punishes Transports

Discussion in 'Wall St. News' started by S2007S, Nov 16, 2007.

  1. S2007S


    FedEx Comes Clean, and Punishes Transports (FDX, UPS, YRCW)

    FedEx Corp. (NYSE:FDX) is seeing shares trade lower today on an earnings warning. Rapidly rising oil prices and a slowing economy with lower shipping volumes are unable to be entirely hedged.

    The air cargo shipper has announced that earnings for the second quarter ending November 30, 2007 are now expected to be in a lower range of $1.45 to $1.55 per diluted share. The company had recently offered guidance in a range of $1.60 to $1.75. For the full fiscal year, the company now expects earnings of $6.40 to $6.70 per diluted share, also lower than the previous forecast of $6.70 to $7.10.

    FedEx shares are down 4% pre-market to a new recent low at around $97.25, and its 52-week trading raneg is $99,00 to $121.42. Brown isn't escaping this entirely. UPS (NYSE:UPS) is seeing shares trade down 1.5% at $72.00, but that is not a new recent low as its 52-week trading range is $68.66 to $79.72. Even the truckers are feeling it. YRC Worldwide, (NASDAQ:YRCW) is seeing a 1.5% drop to $19.80 in pre-market trading, and that would make for a new year low too.
  2. S2007S


    "Since September, our fuel costs have increased more than 8 percent, or $85 million," said Alan B. Graf, Jr., FedEx Corp. (nyse: FDX - news - people ) chief financial officer. "While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices."

    "In addition, less-than-truckload freight trends in the FedEx Freight segment remain weak, despite economic signs that the decline in U.S. industrial production has hit bottom," he added. "We are taking prudent steps to reduce expenses, and are reviewing our capital investment plans for further reductions."

    Earlier Friday, Baird analyst Jon Langenfeld cut his rating on the stock to "Neutral" from "Outperform," citing concerns including the continuing U.S. freight slump, high fuel prices and certain new investments.

    Shares fell 86 cents to $100.50 in premarket electronic trading, having closed Thursday at $101.37.
  3. Ha, it might look like they are in the package business but they are in the oil business. If the fuel surcharge reached parity, they would still have major expenses related to oil, ie tires,etc.