With shares of FedEx (NYSE:FDX) trading around $96, is FDX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
FedEx provides transportation, e-commerce, and business services in the United States and internationally. Transportation is improving so businesses and consumers are increasing their interest in transacting worldwide. Gasoline prices and vehicle efficiency tend to have a significant impact on the company so watch for improvements in these areas. As boundaries on international commerce blur, look for companies like FedEx to be able to provide the shipping services required across the globe.
T = Technicals on the Stock Chart are Mixed
At the beginning of the year, FedEx stock broke-out of a value range that began in late 2009. The stock shot higher but is now trading near break-out levels. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, FedEx is trading between its key averages which signal neutral action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of FedEx options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| FedEx Options | 26.57% | 26% | 22% |
What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| July Options | Steep | Average |
| August Options | Steep | Average |
As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bearish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Mixed Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on FedEx’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for FedEx look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | 7.04% | -31.52% | -11.46% | -0.68% |
| Revenue Growth (Y-O-Y) | 3.56% | 3.68% | 4.91% | 2.58% |
| Earnings Reaction | 1.07% | -6.88% | 0.90% | -3.05% |
FedEx has seen mostly decreasing earnings and rising revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about with FedEx’s recent earnings announcements.
P = Poor Relative Performance Versus Peers and Sector
How has FedEx stock done relative to its peers, United Parcel Service (NYSE:UPS), Air Transport Services Group (NASDAQ:ATSG), Air T (NASDAQ:AIRT), and sector?
| FedEx | United Parcel Service | Air Transport Services Group | Air T | Sector | |
| Year-to-Date Return | 4.79% | 15.71% | 61.10% | 21.38% | 34.16% |
FedEx has been a poor relative performer, year-to-date.
Conclusion
FedEx provides valuable and efficient transportation services to growing industries around the world. The stock recently broke above a value range and surged higher but is now trading near break-out levels. Over the last four quarters, investors in the company have had mixed feelings as earnings have decreased while revenue have increased. Relative to its peers and sector, FedEx has been a poor year-to-date performer. WAIT AND SEE what FedEx does in coming quarters.
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