Even though the company grew revenue 4% this quarter, Smith is not about to let high expectations from the Fed blind the fact that FedEx is still in the middle of some very important restructuring plans. Although the Express and Ground businesses did well this quarter, up 3% and 12%, respectively, FedEx didn't "deliver the goods" in terms of revenue per package. There was a 41% decline in operating income.

Granted, this decline included several charges related to the aforementioned restructuring plans. But adjusted operating income was flat. Again, this goes back to Smith's handling of the overall business and why I support his statements regarding FedEx's business. The downgrades notwithstanding, the way I see it it's best to be disappointed now in guidance than for investors to feel they were steered incorrectly should the company miss estimates later.

The good news is that FedEx's long-term commitment to better performance is real. For now, though, I don't see a scenario where the stock is going to move that drastically in either direction.

That's not to say FedEx doesn't have potential. But free cash flow growth, or lack thereof, makes it difficult for me to fall in love with the stock. I can be persuaded otherwise should shares fall further amid this overreaction.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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