Shipping giant FedEx ( FDX ) is scheduled to release its fiscal fourth-quarter results on June 21. The company will report after the market close, with the consensus calling for earnings of $3.26 per share. During the same period last year, the company earned $2.66 per share, and the stock is up 8.9% on the year.
FDX was recently trading at $162.23, down $22.96 from its 12-month high and $42.52 above its 12-month low. Technical indicators for FDX are neutral and the stock is in a tight sideways trend. The stock has recent support above $157.50 and recent resistance below $165.90. Of the 15 analysts who cover the stock, 10 rate it a "strong buy", and five rate it a "hold". The stock receives S&P Capital IQ's 5 STARS "Strong Buy" ranking.
FedEx has been stuck in a sideways pattern since late March, when it shot higher on a solid fiscal third-quarter report. If the company is able to post another solid quarterly report, I would expect the stock to enjoy another nice rally, but rising oil prices could keep a ceiling on the stock for the time being. The stock has a pretty high valuation, with a P/E of 45.9, so the valuation is going to keep Wall Street from driving shares too much higher, unless the company is able to shatter the consensus estimate for the quarter. The consensus calls for $3.26, but the street has a slightly higher whisper number of $3.28, which indicates a higher likelihood that the company will post solid numbers, but whether or not the results are strong enough to push the stock higher remains to be seen. We will want to see a number above the whisper for the stock to move higher. Given the stock is up 8.9% on the year, and the high valuation, shareholders may want to have an exit strategy in place just in case the results disappoint, and the stock gives back some of its gains on the year.
Stock Only Trade
If you want to set up a bullish hedged trade on FDX, consider a July 145/150 bull-put credit spread for a 35-cent credit. That's a potential 7.5% return (98.1% annualized*) and the stock would have to fall 7.3% to cause a problem.
If you want to take a bearish stance on the stock at this time, consider a July 172.50/177.50 bear-call credit spread for a $0.20 credit. That's a potential 4.2% return (54.3% annualized*) and the stock would have to rise 6.5% to cause a problem.
Covered Call Trade
Originally published on InvestorsObserver.com