Logistics giant FedEx (NYSE:FDX) released its latest earnings numbers last week, which also came along with a warning for investors.
For the first quarter of fiscal 2023, which went up until the end of August, the company reported adjusted earnings per share of
$3.44, which was nowhere near analyst expectations of $5.14. In terms of revenue, the business wasn’t that far off as sales of $23.2
billion were only slightly off Wall Street’s estimates of $23.59 billion.
The results were a disappointment from the company, which blamed the lackluster numbers on challenges it faced in Asia and
Europe. Management said that it was “aggressively accelerating cost reduction efforts and evaluating additional measures to enhance
productivity, reduce variable costs, and implement structural cost-reduction initiatives.” As a result of the uncertainty ahead for FedEx,
the company withdrew its forecast for fiscal 2023.
Management in general has a dire outlook for the economy, with CEO Raj Subramaniam expecting a recession to take place around
the globe. That would certainly weigh down FedEx and other businesses as it would potentially result in declining revenue and
worsening financials.
Shares of FedEx tanked more than 20% on Friday and the stock is now trading close to its two-year lows. If you’re a contrarian
investor or you’re willing to buy and hold for years, it could be an attractive time to buy the stock. FedEx is an industry leader and
even if a recession does happen, it’s a safe bet that it will recover in the long haul, anyway. Plus, with a dividend yield of around
2.3%, you can just collect the recurring income while you wait for a recovery.