2024-05-24 16:21:15 ET
Summary
- FedEx's stock has declined ~5% since I covered it last year, indicating continued stagnation in line with the economic trend.
- Technology savings may not improve margins, as its competitors appear to be pursuing similar innovations, resulting in price competition.
- The US manufacturing industry is in a prolonged slight decline, with lower transportation volumes theoretically increasing customer price discrimination.
- FedEx does not appear to be facing the same labor cost pressures as before, as the job supply and demand gap appears to have closed.
- Amid macroeconomic headwinds, I do not believe investors should expect significant EPS growth from FedEx over the coming two years.
Last August, I published a bearish outlook on the transportation giant FedEx ( FDX ) in " FedEx: Elevated Risk Across Freight Industry Following Yellow Bankruptcy." At that time, Yellow had gone bankrupt amid rising labor cost pressures, signaling what I viewed to be a systemic risk in the freight industry. Fundamentally, I believe its issues are similar to those faced by airlines. The risk of a manufacturing or consumer demand recession could cause a poorly timed profit decline. On the other hand, continued macroeconomic stability may lower profit margins by encouraging more labor cost growth....
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FedEx: Cost Cuts Will Benefit Customers Over Investors