FedEx (FDX) Stock Slips to 52-Week Low: What's Ailing It?
Labor crunch is hurting FedEx (FDX) significantly.
Shares of FedEx Corporation FDX have had a disappointing run on the bourses, ever since the company released first-quarter fiscal 2022 (ended Aug 31, 2021) results on Sep 21. The stock has declined 11.8% ever since. Adding to the woes, shares of the company hit a 52-week low of $220.80 during the trading session on Sep 29, before increasing a bit to close at $221.09.
Reasons for the Disappointing Performance
FedEx reported lower-than-expected earnings per share for thefirst quarter of fiscal 2022. Moreover, the bottom line declined year over year due to supply-chain disruptions and a tight labor market. Escalated labor costs and network inefficiencies stemming from staffing shortages were the major shortcomings inducing the dismal bottom-line performance.
Additionally, the company cut its financial outlook for fiscal 2022 due to labor scarcity. For the same period, FedEx now anticipates earnings per share, before the year-end MTM retirement plan accounting adjustment, and exclusion of the estimated TNT Express integration expenses and costs associated with business realignment activities, in the band of $19.75-$21 (earlier view: $20.50-$21.50).
Per the company’s president, chief operating officer and director Raj Subramaniam, "Overcoming staffing and retention challenges is our utmost priority."
Lackluster Momentum Score & Unimpressive Zacks Rank
The company’s Momentum Score of D further highlights its short-term unattractiveness. Additionally, FedEx currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are Schneider National, Inc.SNDR,C.H. Robinson Worldwide, Inc. CHRW andTFI International Inc. TFII, all presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term expected earnings per share (three to five years) growth rate for Schneider National, C.H. Robinson and TFI International is pegged at 17.9%, 9% and 31.6%, respectively.
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