Why FedEx Stock Is Falling Today

FedEx (FDX -15.32%) reported weaker-than-expected quarterly results after the closing bell on Thursday and cut its profit outlook for the fiscal year.

Investors on Friday don’t seem interested in hitting the road — sending FedEx shares down more than 14% as of 10:45 a.m. ET.

Challenging times

It’s been a tough few years for shipping companies. Rising interest rates and fears about the health of the economy have led many companies to reduce inventories, which in turn has led to lower demand for business-to-business deliveries.

These pressures do not seem to be abating. In its fiscal 2025 first quarter, which ended Aug. 31, FedEx earned $3.60 per share on revenue of $21.6 billion, falling short of Wall Street consensus estimates for earnings of $4.76 per share on sales of 21.9 billion dollars.

Revenue was down slightly year-over-year, with FedEx reporting lower demand for its higher-margin priority services.

“Despite a challenging quarter, we remain focused on transforming our network, improving our efficiency, reducing service costs and increasing our ability to quickly adapt to evolving market dynamics,” CEO Raj Subramaniam said in the earnings release.

Is FedEx stock a buy?

FedEx cut its fiscal 2025 earnings per share guidance to a range of $20 to $21 (down from $20 to $22 previously) and cut its revenue growth outlook to a small percentage single digit, low to mid percentage. the percentage range of digits it was previously targeting. Management has launched a cost-cutting program, but its full implementation will take time.

“Overall, I remain confident in the opportunities for future value creation as we focus on reducing our structural costs, profitably growing our revenue and leveraging insights from our vast collection of data as we continue to build the most flexible, efficient and smart grid in the world. Subramaniam said.

FedEx is an integral part of the global supply chain, and the company should do well over time. But it operates in a cyclical industry, and there’s only so much management can do when demand for its services falls. Investors buying now will need to be patient.