FedEx's (NYSE:FDX) operations are deeply entwined with much of the U.S. economy, which is why its performance is viewed as a bellwether by investors. Well, if it really is the proverbial canary in the coal mine, beware: In FedEx's fiscal fourth quarter, it missed its profit targets, its revenue fell, and management cut guidance for the coming year. Moreover, as MarketFoolery host Chris Hill and senior analyst Emily Flippen note, executives did it without trying to soft-pedal any of the bad news.

In this segment of the podcast, they discuss FedEx's many headwinds -- the loss of the Amazon.com (NASDAQ:AMZN) contract, the trade war, a bad macro environment, and more -- as well as what investors can read into management's unusual bluntness. They also talk about the investment thesis from here.

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This video was recorded on Sept. 18, 2019.

Chris Hill: We're going to start with FedEx. Technically, these are earnings, although fourth quarter profits for FedEx came in lower than expected. Their revenue was also down, and they cut full-year guidance. They didn't really hold back in terms of all of the challenges that FedEx is facing as a company. If you look at FedEx as a bellwether business, then there is cause for concern, because shares of FedEx are down 13%. This is the worst day in over a decade.

Emily Flippen: Yeah, and FedEx is one of those businesses that tends to actually respond pretty significantly to changes in the macro environment. When they had this poor report, to put it nicely, there were a lot of things that they pointed to as contributing, one of those being the trade war and a softening macro environment. Another one being the recently severed ties with Amazon. Earlier this year, they canceled their contracts with FedEx for both ground and air shipping, to do their own initiatives into speedier delivery.

What I thought was really interesting is, FedEx for a while has been a questionable investment just because they're spending so much money to invest their infrastructure. Clearly, there's some softening in their B2B, business to business, area, which is their higher-margin business line. In addition, the issues with Amazon. What I thought was interesting is, going back, they actually downplayed a lot of these things in previous calls, which is why this earnings report in particular was so big for them. A lot of Wall Street analysts as well were actually defending their positions. They were taken aback by it, saying, "Wow, they really misled us with how bad this could be moving forward." At the time, they said Amazon only made up about 1.3% of revenue. This earnings call, you'll see, they're using Amazon as a scapegoat for part of their performance.

Hill: Yeah, it's interesting, because Fred Smith and his team have been there a long time. This is a tough business to run. I think, in general, Fred Smith and his team have run it well. But, you're right, absolutely, about this quarter and the reaction in the investing community. There was a little bit of that, like, "Wait a minute!"

Flippen: "We knew it was bad, but not that bad."

Hill: Right. "This isn't what you've been saying in the past about Amazon." Also -- and this got a little bit of play; I don't think it's as significant as what you mentioned in terms of Amazon and the trade war and the macro economic impact -- you go back to the acquisition of TNT Express. FedEx really trying to expand in Europe. Now, with the benefit of a few years' hindsight, you can look at that and say, "You know what? That didn't go nearly as well as you wanted it to." Yes, there was a cyber-attack. Whether or not FedEx is to blame for that... even if you absolve them of blame in that situation, the case that they were making for acquiring TNT Express, the synergies that could be wrought out, how they could expand their gross margins -- that just hasn't happened. It really hasn't happened the way they wanted it to. And I think we're seeing today coalescing of a lot of negative opinions. Sort of the, "Wait a minute, that didn't work out the way you said it was going to. Now, you're telling us something different about Amazon." And I think for the first time in a long time, there's genuine skepticism about FedEx as a business.

Flippen: I agree. It's not to say that I think FedEx isn't going anywhere. I look five years now, and I do think FedEx is still going to be relevant, it's still going to exist as a business -- but it does call into question the capital decision-making of management, especially now that they're spending so much money to do stuff like modernize their infrastructure, something that they arguably should have done in priority over acquisitions. It does lead to a lot of skepticism from investors.

But when I think about FedEx, while I don't think it's going to be a particularly outstanding stock over the next few years, you can't deny that they're good at what they do. This might be peak FedEx hate, especially if we don't enter a recession in the next, I'd say, six months.

Hill: Also, you think about the next few months going into the holidays -- if FedEx has a blowout quarter in early 2020, then this is a distant memory. We'll close on the stock. As I mentioned, down 13%. Worst day in over a decade. Are you interested at this lower price? Or, do you think there are enough question marks, some of which FedEx has raised, that you're not buying this value play option?

Flippen: Yeah, they've lost a little bit of trust from me here. Their new earnings expectations are about 20% below what they were just before they reported. This one report alone decreased 20%, which is still a significant year over year decline. I'm still not excited by this business, but I also don't think it's the doomsday scenario that some people may feel like it is today.