FedEx: Warning Signal or False Alarm? - Real Time Insight

By Todd Bunton,

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Back on September 4, economic bellwether FedEx ( FDX ) warned about weakness in the global economy affecting their earnings. On Tuesday, the express delivery firm reiterated those concerns after reporting results for the first quarter of its fiscal 2013.

FedEx warned of weaker-than-expected economic growth not just in the developed world, but in China too. On the conference call, CEO Fred Smith gave these ominous warnings:

"Global trade has grown faster than GDP, except for the 2000, 2001 meltdown and 2008 and 2009 for 25 years. And over the last few months, that has not been the case.... exports and trade have gone down at a faster rate than GDP has."

And on China, he said this:

"The locomotive that has driven China's growth is its export industries. And with the situation in Europe and, to a lesser degree, in North America; that is a significant issue for the Chinese economy."

The company also lowered its 2013 earnings guidance from a range of $6.90-$7.40 per share to $6.20-$6.60. That's quite a hair cut.

So what does FedEx's gloomy outlook mean for third quarter earnings season next month? Keep in mind that fellow economic bellwethers like Cummins ( CMI ) issued similar warnings ahead of second quarter earnings season in July. But for the most part, Q2 earnings season held up and stocks have soared since then.

Do you think today's comments from FedEx are a warning signal for the overall stock market, or just another false alarm? Chime in below.

CUMMINS INC (CMI): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: CMI , FDX

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