FedEx Stock Drops Over 6% After Profit Guidance Cut

FedEx faces challenges as stock falls over 6%. The company slashed its earnings outlook and revenue guidance, indicating weaknesses in its core business and economic environment.

Date: 23-03-2025

AI Rating: 4

Impact on Earnings Per Share (EPS)
FedEx expects adjusted earnings per share for fiscal 2025 to decline to a range of $18 to $18.60, a substantial downgrade from previous estimates of $19 to $20 and the original forecast of $20 to $22. This downward revision in EPS reflects a significant concern for investors as it indicates the company's expected profitability is not meeting prior expectations.

Revenue Growth
The company has revised its revenue guidance for the year ending in May to flat or slightly down year over year, indicating a negative outlook compared to prior forecasts which also predicted flat growth. This stagnation in revenue growth could signal ongoing struggles in FedEx's business demand due to external economic forces.

Operational Challenges
FedEx's CFO indicated that the company continues to face weakness in the U.S. industrial economy, which is directly affecting demand for its business-to-business services. The rising uncertainty and external factors, such as proposed tariffs and extreme weather, continue to create a challenging operational environment.

Profitability and Cash Flow Concerns
Despite an increase in adjusted earnings to $4.51 per share compared to $3.86 last year, this figure still fell slightly short of analysts' expectations. Additionally, the discussion around tariff fears and external market pressures raises concerns about future profitability. However, FedEx's stock buyback program demonstrates management's long-term confidence in its transformation efforts.

While FedEx is taking steps to improve profitability and has set goals for permanent cost reductions, the reality remains that the company is currently navigating significant headwinds that could impact future performance. Overall, the reported adjustments in earnings guidance and revenue prospects suggest a cautious outlook for investors.

Stocks: FDX