The market is rallying in the face of relatively awful news out of FedEx. Of course, the pumpers and permabulls are pointing to FDX’s “better than expected” bottom line as fuel for their agenda, but a practical look at the FedEx quarter shows just how bad things really were. A quick glance at their most recent 8K tells the whole story.
I am going to focus on the revenues because this is where the organic growth (or lack thereof) is. The bottom line can be tinkered with and adjusted through various accounting and business changes. Analysts were expecting revenue of $8.32B this quarter. FDX reported $7.85B – a staggering $500MM miss. Total Express Revenues were down 25% while Freight was off 28% (both of which are in-line with recent rails data we’ve been seeing). Why does this matter? FDX is the middleman in business transactions in the economy. Readers want to know why I am fixated on rails data and such? This is why. If FDX is reporting weak revenues it means that producers aren’t shipping and consumers aren’t ordering. It’s just that simple. This isn’t rocket science here. It’s just plain common sense (of which the green shoots theorists are displaying very little of lately).
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.