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FedEx (FDX) Moves 14.4% Higher: Will This Strength Last?

·2-min read

FedEx (FDX) shares rallied 14.4% in the last trading session to close at $229.95. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 4.2% loss over the past four weeks.

The stock surged on 53% dividend hike and the announcement of the addition of two independent directors to the company’s board as part of a cooperation agreement with long-time shareholder D. E. Shaw group.

The company raised its dividend to $1.15 per share (annually: $4.60) from 75 cents per share. The dividend is payable to shareholders on Jul 11, of record as of Jun 27. Additionally, FedEx has added two independent directors, Amy Lane and Jim Vena, to its board, effective immediately, in coordination with activist investor, D. E. Shaw group. Later, a third independent director will be added to the board in consultation with D. E. Shaw group.

This package delivery company is expected to post quarterly earnings of $6.86 per share in its upcoming report, which represents a year-over-year change of +36.9%. Revenues are expected to be $24.4 billion, up 8.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For FedEx, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on FDX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

FedEx is part of the Zacks Transportation - Air Freight and Cargo industry. United Parcel Service (UPS), another stock in the same industry, closed the last trading session 0.8% higher at $174.16. UPS has returned -3.9% in the past month.

For UPS , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $3.15. This represents a change of +2.9% from what the company reported a year ago. UPS currently has a Zacks Rank of #3 (Hold).


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