This expert says ‘buy the dip’ as FedEx shares fell on Q1 earnings

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Sep 21, 2021
  • FedEx reports better-than-expected results for its fiscal first quarter.
  • Donald Broughton suggests buying the dip in FDX on CNBC's "Closing Bell".
  • Shares of the logistics company fell about 4.0% in after-hours trading.

FedEx Corporation (NYSE: FDX) reported better-than-expected results for its fiscal first quarter on Tuesday. Shares of the company, however, slipped 4.0% in extended trading as it lowered full-year outlook due to supply chain issues and a tight labour market.

Donald Broughton’s remarks on CNBC’s “Closing Bell”

FedEx is now down about 20% in the stock market from its year-to-date high in late May, but Donald Broughton of Broughton Capital only sees the dip as a “buying opportunity”. On CNBC’s “Closing Bell, he said:

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FedEx is seeing cross headwinds on labour, but it is built into the stock’s valuation already. This is a company that is doing more volume in every single business, geography, and industry it operates in. And it is being paid more for each of those packages.

Financial performance

FedEx earned $1.11 billion in the first quarter that translated to $4.09 per share. In the same quarter last year, it had posted $1.25 billion in net earnings or $4.72 per share. Adjusted for non-recurring items, the U.S. firm earned $4.37 a share.

The American multinational generated $22 billion in revenue versus the year-ago figure of $19.3 billion. According to FactSet, experts had forecast $4.88 of adjusted EPS on $21.93 billion in revenue.

Guidance for the full year

For the full financial year, FedEx now forecasts up to $19.50 of per-share earnings compared to $19.90 of EPS it had guided for earlier. The shipping and logistics company predicts $7.2 billion in capital spending and expects labour availability to improve in the back half of its current fiscal year.

Also on Tuesday, FedEx said it plans on increasing delivery rates next year by the most in at least a decade. The $67 billion company now has a price to earnings ratio of 13.67.

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