FedEx (FDX) Can’t Hold Gains After Bottom-Line Beat

By Jeffrey Moraes and John Darsie, T3Live Jun 19, 2013, 5:16 PM 

FedEx Corporation (NYSE:FDX): The transportation, e-commerce and business services company beat bottom-line EPS estimates before opening bell Wednesday, but fell just short of revenue expectations. Guidance also came in a little bit light. Investors seemed to focus mostly on the EPS beat as FDX opened more than 1% higher and traded much as 4% higher in the morning session, before giving back the majority of the day’s gains in the afternoon.

EPS Results

Actual $2.13 vs. Expected $1.96

Grew 7.04% year-over-year

Revenue Results

Actual $11.40B vs. Expected $11.44

Grew 3.56% year-over-year

Revenue increased 4.08% from $10.95 billion in the previous quarter

Guidance

EPS Q1 2014: Actual $1.59 vs. Expected $1.63

Earnings per share in the current fiscal year: Actual $6.67-$7.04 vs. $7.28

Key Takeaways from Conference Call

CFO Alan Graf: “FedEx Ground posted another strong year and FedEx Freight margins continued to improve, our profit improvement program is progressing, but we continue to see the effects of customers selecting lower-rate international services. FedEx Express will further decrease capacity between Asia and the United States in July.”

Taking a Look at the Chart

Pattern: Uptrend/Wedge Pattern

FedEx stock rallied more than 1% pre-market after the release and accelerated higher during the session, briefly making a new multi-month pivot high at $103.47. However, the stock has pulled well off highs and is back near the opening price.

FDX has been in a long-term uptrend since 2009 and has been in a steeper uptrend since September 2012. After a weak earnings report in March the stock fell sharply but found support at the uptrend line. Even more recently, though, FDX has been in a downtrend since making 52-week highs on May 11, creating a wedge-type pattern. With today’s early strength it looked like FDX might break higher out of the wedge, but the afternoon sell-off caused close back in the pattern.

(click to enlarge)

Potential Sympathy Trades – Stocks in the Same Sector

United Parcel Service, Inc. (NYSE:UPS)

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