FedEx (FDX) reports 4Q earnings after the bell today and the bar is low going into the report. The stock is only up about 1% this year and is lagging the 14% gains for the Benchmark S&P 500 (SPX). The Option Market is pricing in a +/- 6.5% move post earnings and Implied Volatility is elevated near 52-week highs into the report. The stock spiked to over 2-year highs after its last earnings but has trended lower since, now down around 9% in the last three months.  

Earnings season has slowed to a trickle, and the market has been intently focused on mentions of A.I. in earnings calls, whether production or adoption. Zacks expects it to post earnings of $5.34 per share and revenue of $22.12 billion. While FedEx, as a logistics company, could make a move in that direction, investors should keep an eye on its guidance and its attempts to cut costs. FedEx has missed revenue estimates for the last eight straight quarters.

FedEx’s CEO said in the February quarter that the company was in a difficult demand environment. International shipping remains an expensive issue with global conflicts, such as in the Red Sea. FedEx has been merging its ground and express units to lower costs, including closing some facilities and laying off workers. Its goal is to save between $250-$375 million. However, FedEx also launched a share buyback program for $5 billion last quarter, with the aim of buying back $500 million’s worth in 4Q. Also keep in mind that although the company is slashing positions now, FedEx generally has to bulk up its teams and operations for the holiday rush, so it remains to be seen how they will navigate their new fiscal year.

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