Breakfast News: FedEx Is Stuck in Traffic

Breakfast News: FedEx Is Stuck in Traffic

Source: Image Created by Jester AI.

1. FedEx Beats But Stock Slips Over 5%

FedEx (FDX -2.17%) dropped 6% in after-hours trading yesterday after beating fourth-quarter estimates, though revenue only grew 0.5% as global trade fears weigh on shipping demand, with contributing analyst Lou Whiteman writing "FedEx remains stuck in traffic, with few opportunities to accelerate up ahead." Cost control helped the company report a 12% rise in adjusted earnings per share (EPS) compared to last year's Q4.

• Additional $1 billion in cost cuts in the new fiscal year: FedEx expects Q1 earnings of $3.40 to $4.00 per share, below a Wall Street consensus of $4.03. It's on track to split out FedEx Freight by mid-2026.
• "CEO Raj Subramaniam noted the company's operating leverage": Fool analyst Loren Horst pointed out FedEx is "no longer the growing company David Gardner picked in 2003, but it remains a buy [in Stock Advisor] and might be for investors drawn to its bargain-bin valuation and dividend yield nearly twice that of the S&P."

2. Tesla's Europe Falls Continue

New Tesla (TSLA -4.04%) car sales in Europe have declined for the fifth month in a row, as European Automobile Manufacturers Association figures show a 27.9% drop in May compared to the same month a year ago. In the same period, total fully electric vehicle sales grew 27.2% in the region.

• Market share down from 1.6% to 0.9%: May sales of 8,729 vehicles in the European Union (EU) mean a 40.5% drop from the same quarter last year, though a hoped-for lift from new Model Y sales – already making an impact in Norway – could help arrest Tesla's falling EU sales.
• 1.76 million BYD vehicles sold in the first 5 months of the year: In related news, Reuters reports a production slowdown at China's BYD, the world's largest electric vehicle manufacturer. It suggests a sales slowdown and rising inventory, against intense price competition in the Chinese market, as 20% of its output is exported.

3. What to Watch on Wednesday

Paychex (PAYX -8.45%) is due to post Q4 earnings before today's opening bell, as analysts look for 11.5% revenue growth year over year from the payroll and HR services specialist. It follows on from a 5% revenue rise in Q3, slightly ahead of forecasts.

• Out of the Stock Advisor Penalty Box and back to Buy in March: Jefferies Financial Group (JEF 0.22%) will report its second quarter after market close, as Wall Street expects the decline in Q1 revenue and earnings to continue. Watch for signs of long-term investment banking opportunities and strategic alliances.
• EPS growth of more than 150% expected: Analysts expect Micron Technology (MU -0.97%) to report a 30% year-over-year rise in revenue when it posts Q3 figures this afternoon, as the company continues to benefit from data server and AI demand.

4. Stablecoin Surge on Pause

Circle (CRCL -7.60%) fell 15.5% yesterday to snap a three-day winning streak that saw it reach an intra-day high of $299 Monday. The company behind the USDC stablecoin has seen its stock climb since the Senate passed the GENIUS Act to open the way for crypto currencies backed by stable assets.

• Up 618% since June 5 IPO: Most of Circle's revenue comes from income earned from the assets it holds to back its stablecoin, as analysts remain bullish about the near term. The stock recovered more than 6% in early hours trading this morning.
• "We expect competition to accelerate after stablecoin legislation passes": Compass Point analyst Ed Engel expects the floodgates to open, as financial services provider Fiserv (FI -0.80%) announced plans Monday to launch its FIUSD stablecoin by the end of the year.

5. Your Take

Which do you think will be a better long-term investment, and why: FedEx, UPS (UPS -1.11%), or another rival in the sector? Discuss with friends and family, or become a member to hear what your fellow Fools are saying.