10 Jun

FedEx Trading Near 52-Week Low on Multiple Headwinds

WRITTEN BY Anirudha Bhagat

Dismal stock performance

FedEx (FDX) stock closed at $158.02 on June 7, marking a 38% fall in the last year. The stock hit a 52-week high of $266.67 on June 12, 2018, and touched a 52-week low of $150.68 on June 3, 2019.

FedEx Trading Near 52-Week Low on Multiple Headwinds

FedEx stock has fallen significantly more than the iShares Transportation Average ETF (IYT), which has fallen 6.5% in the last year. The air freight and courier industry comprises ~21% of the fund. On the contrary, the Dow Jones, NASDAQ, and S&P 500 have gained 2.9%, 1.4%, and 3.7%, respectively. FedEx peers United Parcel Service (UPS), Saia (SAIA), and C.H. Robinson Worldwide (CHRW) have fallen 15.5%, 29.3%, and 9.4%.

Multiple headwinds

FedEx’s lackluster results in two of the last three quarters and low fiscal 2019 EPS guidance are the primary reasons behind the stock’s dismal performance. US-China trade tensions have also kept US markets volatile over the last year, pushing them mostly downward and hurting FedEx.

With the release of its second- and third-quarter fiscal 2019 results, FedEx stated that the ongoing trade spat between the world’s two largest economies has affected its business in China. Furthermore, delays in TNT Express’s integration and higher facility upgrade investments, salaries, and bonuses are hurting its bottom line, and the sudden departure of key executives David Bronczek and David Cunningham has worried investors. FedEx stock also received a blow this month after Chinese government officials announced they were investigating the company for allegedly rerouting some of Huawei Technologies’ parcels.

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