Where FedEx Stock Could Be Heading

Stock performance

FedEx (FDX) has fallen significantly over the last year, and the trend is likely to continue for the stock as its fiscal 2020 earnings outlook fell short of analysts’ expectations. As of its June 25 closing price of $155.98, the stock has lost 33.5% of its value in the past year. The stock is trading near its 52-week low of $150.68 reached on June 3 this year and down ~40% from the 52-week high of $259.25 it attained on September 17 last year.

Where FedEx Stock Could Be Heading

The fall in FedEx stock is also much higher than the plunge in the SPDR S&P Transportation ETF (XTN). The ETF, which tracks the performance of US transportation stocks, has fallen 9% in the last year. On the contrary, the NASDAQ, the S&P 500, and the Dow Jones have risen 4.7%, 7.4%, and 9.5%, respectively.

FedEx stock has also underperformed its competitors. Expeditors International of Washington (EXPD), another competitor, has registered a gain of 1.8% in the past year. Forward Air (FWRD) and United Parcel Service (UPS) have fallen 5.8% and 11.9%, respectively, in the same timeframe.

Multiple headwinds

Multiple headwinds have been responsible for dragging down FedEx stock prices over the last year. Back-to-back quarters of disappointing financial performances and lower-than-expected earnings outlooks are the primary reasons behind the stock’s dismal performance.

Moreover, the uncertainty over US-China trade disputes kept US stock markets highly volatile over the last year, mostly in the downward region, which hurt FedEx stock. For the previous three quarters, the company is blaming the ongoing trade tussle between the world’s two largest economies for affecting its business in China.

Also, FedEx stock got a massive blow in late May after Chinese officials announced an investigation into the wrongful delivery of Huawei Technologies packages. Notably, Chinese business operations make up 6% of FedEx’s total revenues.

Investors are also worried about FedEx’s rising expenses due to increased investment in facility upgrades, delays in TNT Express’s integration, and higher severance costs related to voluntary buyouts of some of the US employees.

Additionally, the sudden departures of two key executives, David Bronczek and David Cunningham, also turned investors doubtful over management’s functionality.