FDX

The parcel delivery operator missed quarterly consensus estimates but its market value was soaring by nearly 8.75% to $300 per share in extending trading during the Thursday night, thanks to announcing plans to spin off its freight trucking division through the capital markets with an intention to create a new publicly traded company. The stock is knocking the $300 door for the fourth time in six months, but each time bullish attacks went awry leading to a larger or smaller retracement. What will be the developments now it's hard to say based on current fundamentals, but it would be useful to look more carefully at the investing crowd's moves in the vicinity of this psychologically important band, $300 plus or minus $10 to $15 per share.

FedEx reported both revenue and profit lines for the previous quarter mostly in-line with average expert estimates. This was a small step forward compared to the numbers three months ago as the indications at the end of September sharply missed consensus bets ($3.6 for equity per share instead of $4.86 in Wall Street projections and $21.6 billion instead of nearly $22 billion in expert poll bets for the firm's sales). Now both the bottom and the top lines improved to $4.05 for equity per share on revenue of $22 billion. However, there is almost flat growth on an annual basis, with the last quarter still lagging well behind some much more successful quarterly results in 2021-2023. What is a good sign that FedEx also provided a higher forward guidance for fiscal 2025, with earnings ranging between $19 and $20 per share, which is an equivalent for $4.75 to $5.00 per average quarter. The Wall Street pool assumptions were limited to $19.75.

Markets hope for aggressive cost cutting during a complex restructuring. The permanent cost reductions from FedEx transformation program already released $2.2 billion. The process may become more effective when FedEx will divide itself into two independent businesses seeking for two different growth strategies, even if the two businesses may attempt to preserve commercial and operational synergies. The separation is reportedly to be done within the next 18 months and "in a tax-efficient manner for FedEx stockholders" and executed. By separation, FedEx would "respond to the unique dynamics of the LTL market,” said CEO Raj Subramaniam. The term LTL, in contrast with global parcelling, means "less than truckload" to refer to shipping services for relatively small loads of freight, typically below 15,000 pounds, which may lead to smarter cost efficiency. As a part of the single corporation, FedEx Freight subdivision was increasing its operating profit averagely by 25% a year over the previous 5 years. FedEx Freight will be the largest LTL carrier having the widest global network for transportation and the fastest delivery time within this segment.

Unlike the Biblical kingdom, which is divided within itself and will be destroyed, this business kingdom wants to be divided but still trying to remain a cart moving better. With still a shared brand of FedEx and their common base of customers, commercial agreements will be made between the two entities. Capital allocation optionality including advanced flexibility to invest in profitable growth and then returning capital to stockholders, distinct and compelling investment profiles with two separate public stock listings and distinct stockholder bases were remarked among the basic advantages. We will see sooner or later if this decision will actually allow the two companies to organize a more customized operational execution as well as more tailored capital allocations when unlocking a separate value (some sources say it could be up to $20 billion) for a freight branch of FedEx business., as it was declared, will it release more efficiency for FedEx Express and FedEx Ground businesses. And, finally, investors will see if it was true or not that FedEx Freight assets were probably not fully appreciated within FedEx.