What happened

Shares of FedEx (FDX -0.29%) are up 13% on Thursday afternoon as markets continue to digest the company's third quarter earnings report. The results weren't fantastic, but they were a lot better than what some investors had feared.

So what

FedEx investors had a miserable 2019, and hopes that the company, and the stock, would recover in 2020 have been shaken by the global slowdown caused by the COVID-19 coronavirus. FedEx shares heading into earnings were down 40% year to date, and down 62% over the past year.

A FedEx cargo 777 sits on the runway.

Image source: FedEx.

The company missed earnings per share estimates by $0.02, but revenue was higher than expected. FedEx suspended its guidance for 2020 due to the pandemic but said demand for international express services could increase as commercial airlines scale back their international schedules.

FedEx is unlikely to rebound overnight, and the company's results could be sluggish throughout 2020 and into 2021 if the U.S. economy falls into a recession. But the investments the company made in 2019 that contributed to poor results last year appear on track to pay off, including an expansion of the company's e-commerce delivery capacity and the introduction of year-round weekend delivery service.

Now what

FedEx is a work in progress, and given the current economic climate that work is going to take time. But the underlying business is not going to dry up overnight, and the investments FedEx has made to better serve the U.S. consumer were a wise use of capital.

FedEx trades at 9.8 times forward earnings estimates, and 0.4 times sales. Those earnings estimates are likely to come down, but the company's multiples are well below the 12.45 times forward earnings and 1.13 times sales multiples the market is assigning to archrival United Parcel Service. It is going to take time to play out, but as the economy recovers, those buying in today are likely to be rewarded for their patience.