FedEx (NYSE: FDX) Falls On Cloudy Earnings Forecast

Strong holiday sales helped FedEx’s (NYSE: FDX) earnings more than double last quarter, but the stock fell 4% today after the company reduced its 2012 forecasts.

In today’s third-quarter earnings report, FedEx predicted that its global business would grow 2.3% this year – a reduction from the company’s previous forecast of 2.9%. The company also trimmed its U.S. growth forecasts slightly, from 2.2% to 2.1%.

That was enough to send the stock down 4.5% today to around $92 a share. Bad earnings news generally affects FedEx more than the average stock because of its status as an economic bellwether. Because FedEx ships packages all over the world, investors have long deemed it a strong indicator of how strong the global economy is.

Last quarter its earnings were strong. In the three months ended February 29, FedEx reported a profit of $521 million, or $1.65 a share, compared with $231 million, or 73 cents a share, during the same quarter a year ago. The actual also way outpaced the company’s December forecasts of between $1.25 and $1.45 a share.

Still, it seems investors are focusing on the bad news.

Despite the drop, FedEx is trading close to its 52-week high of $98.60 a share. The stock is still up 10% for the year. And FedEx still has plenty of value, trading at less than 13 times forward earnings.

Published by Wyatt Investment Research at