FDX reports their fiscal Q2 earnings before the open tomorrow and the options market is implying about a 5% one day move, which is rich to the 4 qtr avg move of about 3.5%.
The stock has been a monster this year up 52% trading at new all time highs, aided by a slightly improving global economy, a series of restructurings and the entrance of an activist investor.
On a shorter term basis, I would expect that the stock could be vulnerable to a pull back to the 50 day moving average (circled) in the low 130s with anything less than a beat and raise print.
Despite the massive move higher this year, the stock remains mildly cheap relative to UPS with a tad better expected growth but not particularly a huge bargain at about 20x fiscal 2014 earnings expected to grow 13% and 16x next year’s that are expected to grow 26x, on sales growth in only the low single digits.
Wall Street analyst remain fairly mixed on the stock with 17 Buys, 14 Holds and only 1 Sell with an avg 12 month price target of $148.
Implied volatility is high, as evidenced by the implied move, nearing the highs of the year, excluding the summer blip on rumors of activist involvement, which was ultimately a different activist than thought. I expect IV to come in from the high 20s to the low 20s after the print.
Stock seems priced for perfection in my opinion.
Bloomberg Estimates:
* 2Q adj. EPS $1.64 (range $1.50-$1.80)
* 2Q rev. $11.50b (range $11.37b-$11.75b)
* 2Q segment rev. (avg of 4): Express $6.98b, Ground $2.84b,
Freight $1.40b
* 2Q segment oper. income (avg of 4): Express $301m, Ground
$458m, Freight $83m
* Current FY14 guidance (from 9/18): Sees yr adj. EPS up
7%-13% (implied EPS about $6.67-$7.04), est. $7.02
* NOTE: FDX in Oct. authorized 32m-share buyback
* NOTE: Third Point’s Daniel Loeb said he met with FDX CEO in
Nov.