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Michael Fowlkes' Analyst Insights


InvestorsObserver
Options and ETF Analyst Writer
Michael Fowlkes
Author Bio

 

FedEx reports fiscal first-quarter numbers

Michael Fowlkes

9/15/2018 11:54 AM

What's Happening

Shipping giant FedEx (FDX) will report its fiscal first-quarter results after the market close September 17. The consensus calls for earnings of $3.83, versus $2.51 during the same period last year. FDX stock has fallen 0.8% on the year.

Technical Analysis

FDX was recently trading at $255.92 down $18.74 from its 12-month high and $44.18 above its 12-month low. InvestorsObserver’s Stock Score Report gives FDX a 74 long-term technical score and an 87 short-term technical score. The stock has recent support above $240 and recent resistance below $260. Of the 19 analysts who cover the stock 16 rate it Strong Buy, 1 rate it Buy, 2 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell. FDX gets a score of 83 from InvestorsObserver’s Stock Score Report.

Analyst's Thoughts

FDX sold off mid-summer, but the stock has rebounded and shares are close to break even on the year. The company should continue to benefit from a strong overall economy with low unemployment and strong consumer confidence. Earnings have been on the rise, with profits up 20% per annum over the last five years, and earnings are expected to continue to grow at an average annual pace of 13.4% over the next five years. FedEx has a good earnings track record, and the company has posted better than expected results on the top and bottom line in each of the last three quarters. The street expects another earnings beat this quarter, with a whisper number of $3.84, and analysts have an average price target of $284.87 on the stock.

Stock Only Trade

If you're looking to establish a long stock position in FDX consider buying the stock under $255. Sell if it falls below $236 or take profits if it gets to $293.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a 11/16/18 210/220 bull-put credit spread for a $0.4 credit. That's a potential 4.2% return (24.1% annualized*) and the stock would have to fall 13.8% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider an 11/16/18 280/290 bear-call credit spread for an $0.80 credit. That's a potential 8.7% return (50% annualized*) and the stock would have to rise 10.4% to cause a problem.

Covered Call Trade

If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 11/16/18 $260 covered call. Buy FDX shares (typically 100 shares, scale as appropriate), while selling the 11/16/18 $260 call for a debit of $247.89, per share. The trade has a target assigned return of 4.9%, and a target annualized return of 28.3% (for comparison purposes only). 

 

 

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