What happened

Shares of FedEx (NYSE:FDX) fell more than 8% on Wednesday morning after the shipping company recorded another earnings miss and guided down for the full fiscal year. On a post-earnings call, management said that after a difficult series of quarters, "we are at the bottom," but investors appear to have run out of patience.

So what

After markets closed on Tuesday, FedEx reported fiscal second-quarter adjusted earnings of $2.51 per share on revenue of $17.3 billion, short of the $2.76 per share in earnings on $17.6 billion in revenue that analysts had expected.

CEO Fred Smith called the current fiscal year "a year of continued significant challenges and changes," as FedEx deals with tariff wars and trade issues and new competition with former customer Amazon.com, while trying to integrate its $4.9 billion acquisition of European freight shipper TNT Express.

A FedEx plane on the runway.

FedEx shares remain stuck on the ground. Image source: FedEx.

Operating margin for the quarter fell to 3.2%, from 6.6% in the same quarter a year prior, due to issues including increased costs, weaker global economic conditions, and intense price competition. FedEx also cited the late Thanksgiving holiday in 2019, which it said pushed online shopping out of the recently completed fiscal quarter and into early December.

The company took an asset impairment charge of $66 million related to the retirement of 10 aircraft, part of a plan to streamline network capacity. FedEx is also investing to ramp up delivery to seven days a week, which it hopes will create more opportunities and better asset utilization once it is up and running.

FedEx said it now expects full fiscal year earnings between $10.25 to $11.50 per share, short of the $12.03 consensus, on a drop in revenue from its transportation segment and higher expenses in residential delivery.

Now what

The good news for FedEx shareholders is that it is hard to think of ways things could get worse for the company. That implies management might be correct in saying it is nearing a bottom. The question is: How long will it take to start climbing higher again?

The bull case from here is that it appears we could be nearing at least a partial resolution on issues like Brexit and U.S.-China trade relations, which could alleviate some of the macroeconomic issues FedEx is facing and stimulate trade growth.

The company's spending to revamp its network should be completed by the end of the current fiscal year and the TNT integration completed by early fiscal 2022 at the latest. Over time, those headwinds can turn into tailwinds assuming FedEx can capitalize on Sunday deliveries and its strengthened and streamlined European network.

I'm still a believer in FedEx long term, but if nothing else, shareholders were served notice by the company that this turnaround is going to take time.