FedEx Shares Surge on Strong Third Quarter Results
Shares of international package delivery company FedEx Corp. (FDX) rose $17 (11.8%) yesterday, after the company reported a third quarter earnings beat, and raised its full-year 2016 profit estimate (May year-end). The third quarter included better-than-expected operating income, revenues and earnings per share (EPS).
As the company approaches its 2016 fiscal year end in May, EPS growth is now expected to be about 19.6%. Turning towards 2017, EPS growth looks to be about 11.8%; although analysts might increase that number, based on the successes achieved in yesterday’s earnings report.
The 2016 price/earnings ratio (P/E) is 15.1, and the 2017 P/E is 13.5. It’s fair to say that the stock is fairly valued at the current price, based upon 2017 EPS.
FDX rose more than $40 from its January lows, and it’s approaching long-term upside price resistance at $163. It’s unreasonable to expect it to climb past $163 in the short-term. I expect FDX to pull back to about $150, and commence trading sideways.
Traders should sell now, and put the capital into another stock that’s on the verge of a new price run-up, such as Carnival Corp. (CCL) or GameStop (GME).
Longer-term investors still own stock in a great company. Hold your shares. If you want to accumulate more shares, try to buy around $150.