Shares of logistics giant FedEx (NYSE:FDX) crashed by more than 15% on Friday after the company posted its latest earnings numbers. The company reduced its guidance for fiscal 2025 after noticing that customers were looking to save costs by opting for slower delivery times.
In the first quarter of Fiscal 2025, FedEx reported revenue of $21.6 billion, which was down slightly from the $21.7 billion it reported in the same period a year ago. The more troubling number was net income, however, with FedEx reporting just $0.79 billion in earnings versus $1.08 billion in the prior-year period.
For the current fiscal year, it is expecting revenue growth in the low single digits versus a previous forecast which called for low-to-mid single-digit growth. While that might not sound like a significant downgrade in the forecast, it’s yet another sign that the economy is not in great shape. And when that’s the case, demand for e-commerce and the need for logistics could continue to diminish. Investors may be concerned that demand may deteriorate even further in future quarters.
Although last week’s sell-off didn’t put the stock at a low for the year, shares of FedEx are now trading around where they were back in June. The stock is trading at 0.9 times its trailing revenue and at 14 times its estimated future profits.
While the outlook is troubling for the economy, FedEx can still make for an excellent option for long-term investors as its business will improve as the economy bounces back. Buying it while the market is bearish on the stock can be a great move for investors who are willing to be patient.
