FDX stock ( NYSE:FDX ) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of FDX stock.
Over the past month, shares of this package delivery company have returned +2.6%, compared to the Zacks S&P 500 composite’s -0.8% change. During this period, the Zacks Transportation – Air Freight and Cargo industry, which FedEx falls in, has lost 4.1%. The key question now is: What could be the stock’s future direction?
Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Revisions to Earnings Estimates
Here at Zacks, we prioritize appraising the change in the projection of a company’s future earnings over anything else. That’s because we believe the present value of its future stream of earnings is what determines the fair value for FDX stock.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock’s fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, FedEx is expected to post earnings of $2.79 per share, indicating a change of -42.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.
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