Friday's Headlines: FedEx Forecasts Growth Despite Challenges
Here were the biggest movers in the MyWallSt shortlist this week:
Moving Up ⬆️
Trupanion (TRUP) +18.0%
Datadog (DDOG) +17.5%
Teladoc (TDOC) +17.0%
Cloudflare (NET) +17.0%
Avalara (AVLR) +16.9%
Moving Down ⬇️
Nordstrom (JWN) -5.8%
Tripadvisor (TRIP) -5.7%
Wynn Resorts (WYNN) -5.3%
Airbnb (ABNB) -3.8%
Booking Holdings (BKNG) -3.8%
Here are the stories that you need to know ahead of market-open today, Friday, the 24th of June.
FedEx Forecasts Growth Despite Challenges 🚚
Shares of FedEx (FDX) are up slightly ahead of market open today as the shipping giant posted decent results from the last quarter and a strong outlook for the coming year.
Reporting on its fourth-quarter and full-year results for fiscal 2022, FedEx recorded earnings of $6.87 per share and revenue of $24.4 billion, up 8% from the year before. What really seems to have pleased the market was the forecast for the coming fiscal year, where the company expects earnings of between $22.50 and $24.50 a share. This was on the higher end of expectations and was encouraging to see considering the wider market uncertainty.
Like so many other courier and shipping companies, FedEx experienced a massive boost at the start of the COVID-19 pandemic. However, rising fuel costs, labor shortages, and lockdowns in China have challenged these companies in recent months, as well seeing as lower package volumes as customers start to rely less on e-commerce. Indeed, FedEx reported that it saw its average daily package volume drop in the past quarter from 9.9 million a year ago to 9.36 million.
To counter this, FedEX is focusing on higher-value deliveries that will boost its profits under new CEO Raj Subramaniam. In the report, Subramaniam said, “"Our foundational investments have set the stage for a strong fiscal 2023. As we move forward, our focus will be on revenue quality and lowering our cost to serve.”
Netflix The Latest To Lay Off In Tech ✂️
Streaming company Netflix (NFLX) has announced that it is laying off roughly 300 employees across the company. This comes in the wake of initial personnel cuts of close to 150 people just over a month ago following its less than impressive quarterly earnings report.
A statement from the company yesterday outlined that:
“While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth. We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition.”
The main reason for this marked pullback in employee numbers appears to stem from Netflix’s surprise drop in subscribers last quarter. The loss of 200,000 subscribers in the first quarter of the year was the firm’s first decrease in numbers for over a decade and resulted in it losing over 25% of its value in a single day.
Since then, Netflix has been trying to tighten its belt as it seeks to bolster both subscriber numbers and revenue figures. Job cuts, a reported move into monetizing through advertisements, and a mass clampdown on the sharing of accounts are the main weapons currently being used to try and right the ship.
Yesterday’s job cuts have had little impact on Netflix’s share price, with Wall Street likely becoming used to layoffs in the tech sector as of late, but Netflix still remains down close to 70% this year-to-date.
FactSet Posts an Impressive Quarter ⬆️
FactSet (FDS) enjoyed its day in the sun yesterday, with the stock jumping 8% off the back of some stellar earnings. Revenue was up 22% year-over-year to $489 million — well ahead of analysts' estimates — while the company’s annual subscription value came in at $1.94 billion, a ways ahead of last year’s figure of $1.62 billion.
There were encouraging words from CEO Phil Snow too:
“Our double-digit ASV growth demonstrates the value of our offerings and continued strong demand from our clients… While the macro environment is challenging, FactSet has a history of growth even in volatile markets."
While top-line revenue was great, the company did see a drop in profits. Net profit for the quarter was $75 million, compared to $101 million for the same period last year. This fall was due to a $49 million impairment charge attached to exiting office space as it sets itself up for a better hybrid working model. If we exclude this one-off expense from things, the company’s adjusted earnings per share of $3.76 blew past analysts’ expectations too, capping a great quarter for the business.
Unless you work in the world of finance, you’ve likely never heard of FactSet. Its data and analysis platform combines feeds from 220 different sources so that news and trends on all types of investable instruments — including commodities, bonds, and stocks — are never more than a click away. It shows its value through impressive retention rates and a stable of high-value clients.
Far from the most exciting business in the world, it has been a steady performer on the public markets for more than two decades. Its profitable business model generates high volumes of cash flow, which the company uses to further provide shareholder value in the form of buybacks and a constantly increasing dividend.