FedEx Overdelivers


Image source: Antonio Gravante /

What's going on?

FedEx, the shipping giant, said late on Monday that it made more money in its most recent quarter than research analysts expected, and it raised its prediction for its profit later this year. Investors rewarded the stock by sending it up 7% on Tuesday!

What does this mean?

We’ve been reporting a lot about the rise of e-commerce (e.g. Amazon). FedEx has capitalized on the huge shift in people’s shopping behavior because it’s often the company that actually delivers the goods. Also, it gave investors a positive update on its integration of TNT Express, its Dutch competitor that FedEx bought last year in its biggest ever acquisition (FedEx said the takeover would lead to higher profits than many investors thought).

Why should I care?

The bigger picture: FedEx is often seen as a bellwether for the overall economy.
The logic is pretty simple: if people are spending more money on buying things, then FedEx is shipping more stuff. The relationship, however, might not be perfect (e.g. perhaps FedEx is growing at the expense of other shipping companies).

For the stock: Amazon might not always be a friend to Fedex.
It’s no secret that Amazon is looking at ways that it can own more of its distribution network (e.g. hire its own drivers or deliver items via drones). For now, the growth of e-commerce (led by Amazon) is helping FedEx increase its sales. Tomorrow could be a different story…

Originally posted as part of the Finimize daily email.

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