The FedEx corporation has been one of the leading supply chain management companies in the US since its very inception. Its delivery services in shipping goods have been seldom paralleled by its competitors, at least in the US. However, the stock prices for FedEx were seen to be dwindling with the onset of 2021. The stock prices have already seen a dip by 8% and predictions say they could go down further. The reasons behind this fall have been further investigated.
The Sudden Dip in FedEx Stock Prices Explained
The US sales to inventory ratio have continued to decline for the company suggesting that FedEx could benefit from limited supply chains. If there was something constant in 202 it was the monumental changes that businesses suffered on the stock market, where even the biggest players turned nothing in the blink of an eye. If looked at from a shorthand point of view, the growth for FedEx could continue to slow down substantially in the year 2022. The company is touted to be vying for a mere amount of 90 billion dollars as revenue from the fiscal year of 2022. This amounts to a small increase of 7.1% from the previous fiscal year of 2021. Revenue growth in singular digits looks bad for FedEx given the fact that the company took a huge leap of about 20% between 2020-21, owing to the tailwind of the pandemic and increased shipments all over the world. However, 2021 painted a different picture where the company seemed to have become a victim of its own progress.
After an initial round of rules and regulations being imposed with the outbreak of the global pandemic, the FDX prices gradually increased with people staying home and ordering things online. The prices saw a peak with the pandemic continuing for almost 2years now. However, as the USA saw the majority of its population completing full vaccinations, the stock prices began to take a hit. Ground deliveries were no longer required as people once again started going out. The month of august itself saw a hit of -8.5% due to these reasons. The FDX stock prices also had a mere 8% raise yearly, when compared with a usual 19% raise on the S&P 500 index. Although FedEx showed a quarterly inline growth in quarter four of 2021, the stock prices of FedEx went down after United Parcel Service revealed its quarter two stats with a huge decrease in ground operations, due to the pandemic. The question that perturbs most investors now is whether this decline would be reflected in the stock prices of the upcoming month or if NYSE: FDX would take a sharp turn and reveal an upward graph? The answer to this could be explained by looking at trends from previous years.
Why Could There be a Predicted Rise in FedEx Stock Prices?
The contrary point would be to look at the 7% raise predicted for 2022 as a beneficiary factor for the stock prices. The prediction forecasts that Fed Ex could continue to grow despite difficult situations and without the provision of increased deliveries that came with the onset of a global pandemic. Along with the predicted increase in revenue, individual parts of FedEx like Ground, FedEx Express, and FedEx Freight marked their own records in terms of individual revenues incurred. Therefore apart from focusing all of the attention on digits and stats, it would be productive to look at the bigger picture for the company. This would entail looking into expansions in the fleet, business changes, e-commerce developments, and other departmental alterations. The company has also been effectively trying to improve the routes from the European market to the US. This is because of FedEx Europe majority (almost 90%) of the US markets with Europe.
All of These Costs Need to be Acknowledged and Taken into Consideration.
Trends predict that there could be a good chance of a rise in stock prices over the next few months. Previously, whenever there has been a decline in FDX stock prices of over 8%, within a span of 21 days or more, there has been a subsequent rise in prices. Forbes Magazine carried out research from the secondary data they derived out of the past trends in stock prices revealed by the company. The data shows that out of 244 cases, more or less 60% showed a hike in stock prices eventually. This means that about 166 cases had revealed a price hike over the last decade. So there is a chance of a good 67% rise in the prices in the coming month. Therefore it could be a worthwhile time for the investors to start investing in FedEx stocks so that they could reap long-term benefits.
FedEx nonetheless remains an extremely desirable pick with its current evaluation of about 260 dollars. The company looks in a great position and FDX stocks have a current price to earnings ratio of 13.6, thereby effectively positioning itself in the bargain place. The issue of falling delivery numbers and ground shipments still remains of concern but it did not come as a shock for the company. The pandemic in the past year has created many unpredictable trends and if there is to be a dip, it will be at par with the values of the stock in the pre-pandemic era. For long-term investors, this comes as a golden opportunity, given the value of its stock and the solid fundamentals over which the company operates. It would be fruitful for the investors to use the current lows in stock prices and invest in something that has a guaranteed rise in the long-term future. Apart from the FDX stock prices, the pandemic has also created many incoherencies in other stocks which could prove to be great for trading.