What happened

The global economic slowdown is taking its toll on FedEx (FDX -0.71%), hitting quarterly results and causing the company to withdraw full-year guidance. The poor results caused investors to take the exit ramp, sending FedEx shares down 29.6% for the month, according to data provided by S&P Global Market Intelligence.

So what

FedEx has long been considered a bellwether stock because so many different sectors rely on the global shipping giant to move their products from point A to point B. There was fear heading into earnings season that a war-induced slowdown in Europe, COVID-related shutdowns in China, and the Federal Reserve's effort to slow the U.S. economy would impact FedEx's results. Still, investors were caught off guard by how bad the numbers were.

FedEx shares lost nearly one-quarter of their value on a single day in mid-September after preannouncing results for its fiscal first quarter ending Aug. 31. The company earned $3.44 per share in the period, well below analyst expectations for $5.48 per share, and said it was withdrawing guidance for the full fiscal year due to the uncertain economic environment.

To some extent, the economy soured at exactly the wrong time for FedEx. The company just went through a CEO transition and is in the early stages of a campaign to streamline its operations.

Alarmingly, FedEx said trends "significantly worsened" late in the quarter, suggesting the worst was not over. The company is responding with further cost cuts, including closing FedEx Office retail locations, trimming hours at certain facilities, cutting cargo flights, and deferring planned hiring.

Now what

There's nothing to suggest this is a permanently crippling issue for FedEx, and investors with a long time horizon might note the stock is significantly cheaper than it was in early September. For those with patience, this looks like a buying opportunity.

FedEx seems to think so, on Oct. 4 announcing a $1.5 billion accelerated share repurchase agreement.

Historically, investors have done very well owning FedEx shares. Since the turn of the century, FedEx shares are up 287% compared to 155% for the S&P 500. Given time, the company can outperform again, and investors today can enjoy a 3% dividend yield while they wait. But no shipper can defy the laws of economics, and FedEx is unlikely to soar until the global economy gets back on track.