FedEx announced today on 6/14 that they would be increasing their dividend payout by 53% to $1.15 per share. While this in itself is fine since their largest direct competitor UPS paid out $1.52 per share. Off of this news FedEx prices soared 14.41%, the largest single day gain for FedEx in nearly 30 years. You read that right, FedEx just had its largest single day gain in nearly 30 years, 2 weeks prior to their earnings call on 6/23.
Earnings per share has been on the decline since last June’s call. The most recent earnings in March, FedEx missed by 0.10. They dropped 5% during AH after the call, and another 10% after Market open the following day. This type of action would completely wipe away all of the gains from the extraordinary day they had today.
Just from being in the industry, I know that FedEx is primarily B2B shipping. With the U.S. Economy going the way it has, I don’t see them having an outstanding quarter. If anyone has knowledge of when their fuel contracts expire that would be most helping in verifying this DD. Rising Labor Costs, Rising Shipping Costs all directly affect the margins in transportation. With Retails being announced in the morning I will be able to gauge the play better. Another factor is the Dividend payout is on the 24th, 1 day after the earnings.
My current play is 200p for Jul 1. If the stock reverses from todays amazing gains I may let it go early and re-enter once some of the IV drops off. If anyone has anything to add (either for or against this play), please feel free to do so.
We had a 10 point drop today! At which point I sold my play for 31% gains! (Thanks to the advice of TnP as well as the other individuals that encouraged me to take the win.) All of my DD still hold true in my opinion. If we have a temp rally tomorrow, I will get back in at a cheaper cost.
I have been watching this for a while. Have some positions already but entered Aug 19 200p and 220p today. Will hold out through earnings.
Freight / Shipping industry is closely tied up with the amount of demand that there exists in the supply chain. We have seen the reduction of the value/demand for transportation and the logistics industry. Even used freight trucks prices are plunging & trucks are sitting idle. FedEx will need to price more aggressively to undercut competitors as demand cools + inflation concerns related to wages & gas.
As o4k mentioned the recent share price increase was related to the dividend increase. Latest earnings were not very impressive and the dividend record date is tomorrow.
Hoping for some bearish news that can signal the start of a reversal.
I’ve changed my position to 6/24 puts at 220 strike. I felt like my original play of July 1 200p didn’t have enough upside/time to the kind of action i’m looking for. I still fully believe they will miss earnings, and/or give a weaker guidance. They are still riding high on the Dividend announcement which is also paid out on Friday.
In on this as well with xtra time to expiry in case they sweet talk guidance or SPY runs. I’m thinking this is good entry with oil at 104, in addition to the expected decrease in package volume.
Options are a bit illiquid though so didn’t go too crazy.
Well, This did not turn out how i expected. FedEx missed earnings as I thought they would but not enough for the Markets to pull back on them. Whether or not those numbers were padded to get closer to expectations, I probably will never know. For those of you whom grabs puts with me, just know I feel your pain and I apologies for suggesting a play that did not work. They closed at 228, after earnings they shot up to 242. They have since retracted down to 234. Hopefully we get some downturn PM and they fall with it so those with puts can get out with Minor loses or break even.
Currently holding 225p JUL1 FedEx. I will try to close at open.
Looks like someone scored big on their 07/15 230c, and someone else opened a big put position for January 2023 240p. Although, those 230c are somewhere in the middle of the spread. Perhaps it’s a new position. Idk. These flow tags are unreliable LOL.
seems shady to me, that someone would make that kind of move on a company that missed their numbers and probably will continue to miss for the rest of the year…
as well as the other individuals that encouraged me to take the win.) All of my DD still hold true in my opinion. If we have a temp rally tomorrow, I will get back in at a cheaper cost.