FedEx Warning Hits Stock - TheStreet

FedEx Warning Hits Stock

Early pre-market indications show the stock down 3 points from Friday's close.
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Updated from May 9FedEx (FDX) - Get Report cut its expectations for fourth-quarter earnings Friday, citing higher fuel prices and a weakened economy.

The package-delivery operator said it now expects earnings for the quarter ending May 31 to be $1.45 to $1.50 a share, compared to its prior forecast of $1.60 to $1.80 a share.

"Since we provided earnings guidance for the fourth quarter in March when the crude oil price was slightly above $100 per barrel, our estimated fuel costs for the quarter have increased more than 7 percent, or $100 million from our previous estimate, and the weak economy has restrained demand for U.S. domestic express package and LTL freight services," said Chief Financial Officer Alan B. Graf, Jr., in a press release.

Cramer: FedEx Reveals Market's False Assumptions

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"While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices. This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy," Graf said.

Shares of FedEx slumped 3% to $87.69 in Friday's after-hours trading and is indicated there Monday morning.

Last month, FedEx rival

UPS

(UPS) - Get Report

cut its expectations for first-quarter results, which it reported on April 23. At that time, UPS said it saw "no signs of economic strengthening in the second quarter."

UPS dropped 1.7% to $69.10 in Friday's after-hours trading and was indicated 1% lower this morning.

This article was written by a staff member of TheStreet.com.