FedEx Investors Push Buy Button After Q2 Earnings Beat: How PreMarket Prep Nailed The Stock Move

FedEx Corporation FDX, a company that some consider a bellwether for the markets and the economy, reported a second-quarter beat after the close on Tuesday.

That report jumpstarted a rally in the broad markets. As a result, the price action following that report makes it the PreMarket Prep Stock of the Day.

Taking The Markets Down: After the close on Sept. 15, FedEx rocked the markets when it issued preliminary first-quarter earnings results that were well below Wall Street expectations.

For investors, it was “sell” and ask questions later. In turn, the broad markets went in retreat and it was one of the main catalysts for the plunge to the October low.

FedEx Forms A Bottom, Rebounds: Seven sessions later, FedEx finally bottomed at $141.92 and rallied to end the session at $144.95.

That marked the lowest level for the issue since June 2020, when it bottomed at $127.29 and continued its post-COVID shock rally.

Last Tuesday, Dec. 13, along with many other issues and indexes, FedEx made a new high for the move at $184.30 and retreated to end the session at $176.88. Since that peak, it has succumbed to market forces and reached its lowest level since making that high when it bottomed on Tuesday at $162.61. It did rebound to close at $164.35.

Related Link: FedEx Revenue Below 'Flattish' Expectations: 6 Analysts Dissect Earnings Miss

FedEx's Mixed Q2 Report: After the close on Tuesday, the company reported quarterly earnings of $3.18 per share which beat the analyst consensus estimate of $2.83 by 12.37%.

This is a 34.16% decrease over earnings of $4.83 per share from the same period last year.

Also, the company reported quarterly sales of $22.8 billion, which missed the analyst consensus estimate of $23.74 billion by 3.96% This is a 2.87% decrease over sales of $23.47 billion in the same period last year.

At this time, investors are not focusing on lower FY23 EPS guidance coming in at $13-$14 vs. the $14.08 estimate.

PreMarket Prep's Take: When FedEx was being covered on the show Wednesday, it was already trading sharply higher by nearly $9 at the $173 area.

Co-host Dennis Dick had mixed feelings on the issue at this elevated level.

"I have a hard time getting long at these elevated levels, and I am not going to short it either," he said. "It has room to $179-$180 and I may take a short at that level if reached."

The author of this article was skeptical FedEx would reach the $180 area, at least in Wednesday’s session. Instead, investors were alerted to the most recent price action in the issue that will come into play — that being the three-day high of $173.69 and the four-day high of $176.30.

FDX Price Action: After a much higher opening Wednesday ($174.54 vs. $164.35), the issue immediately peaked at $174.78 and sharply reversed course. The ensuing decline found support just under the upper end of Tuesday’s range ($168.61), with FedEx falling to $168.16.

As of 2 p.m. EST, the issue was consolidating at the $172 area. FedEx ultimately gained 3.43% Wednesday, closing at $169.99. 

The discussion on the issue from Wednesday’s show can be found here:

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