Sunday, March 25, 2007

Sell FedEx

FedEx 3Q earnings dip 2 pct. on slowdown (AP)

Uere Hobson loads packages into her truck at the FedEx express station in Nashville, Tenn., before leaving to make deliveries on Wednesday, March 21, 2007. FedEx Corp. said a slowing economy, severe winter storms and lower fuel surcharges contributed to a 2 percent decline in its fiscal third-quarter profit. Its shares fell nearly 2 percent. (AP Photo/Mark Humphrey)AP - FedEx Corp. reported a 2 percent drop in third-quarter earnings Wednesday, blaming the decline largely on an economic slowdown that tested the company's ability to quickly adjust costs. The shipping company said it also will have to struggle to keep up with a long-range goal of 10 percent to 15 percent growth a year in per share earnings.



However, it even went up 2.08 points last Friday, ending at 112.71, or 1.88% higher than the previous day. Its volume is still high at 2,005,348

Looking at the divergence indicators, and considering the slowdown, we may consider selling short for FedEx.

I believe that the 2 pct. slowdown does not affect much of the investors' sentiment about Fedex at the moment. But, better be wary. With P/E at 17.79, the stock is a little undervalued compared with the rest. But this has to give if the profits continue to dip.

Sell FedEx.








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