FedEx
Inside the Numbers
For its fiscal second-quarter, it earned $4.83 per share on revenue of $20.6 billion. This handily topped estimates as analysts were looking for $4.01 per share and $19.5 billion in revenue. Package deliveries increased by 29% to 12.3 million with revenue per package increasing 7% to $9.24.
Comparing FedEx's 2020 Q2 results to 2019's Q2 shows how much it's benefited due to the pandemic. Last year, it earned $2.51 in the quarter on $17 billion in revenue.
Stock Price Outlook
FedEx has recently been in the spotlight as the company is playing a key role in the vaccine's distribution as part of Operation Warp Speed. The vaccine needs to be kept at cool temperatures. While this is a demonstration of the company's logistical expertise, it won't likely have a meaningful impact on its bottom-line. However, there is some concern that holiday deliveries could be complicated by these efforts. Already, orders for online sellers like Walmart
Ultimately, these are "good" problems to have for Fedex. As a result of the coronavirus, it's stock is up 90% on the year. However, it's possible that the end of the pandemic could mark a top which would explain the stock price's weakness following a strong earnings report. Stocks tend to top on positive news, when it becomes priced in.
A successful vaccine being distributed means that some of the extreme-trends of the past year will reverse. As a result, it's likely that spending in physical retail stores explodes while ecommerce spending pulls back.
Just like FedEx's strong earnings report was an indication that a short-term top may be in, weakness on a temporary dip in ecommerce sales would likely be an excellent entry point for long-term investors. Ecommerce will continue to take an increased market share in the long-term, although this will have probably peaked due to the pandemic's effects.
