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FedEx Misses on the Bottom Line and General Mills Beats

March 20, 2013 | About:
U.S. equity markets brushed off European worries on Tuesday and it appears it has put those worries behind as economic data continues to be bullish. Speaking of the economy, the Federal Open Market Committee (FOMC), which sets the fed’s monetary policy, meets again today and updated economic projections and statements from the meeting will be released at 2 p.m. EST. followed by a Fed Chairman Ben Bernanke's press conference.


Earnings season is again around the corner, but several companies continue to report 2012 figures.

Shares of delivery service FedEX (FDX) are under pressure after the company reported third quarter profit of $1.23, well below analyst estimates of $1.38. Despite revenue coming in above analyst projections, FedEx was hurt by customers selecting cheaper and slower delivery options. FedEx is also being hurt by overcapacity in the industry that continues to squeeze margins. In response to the lower numbers and “longer term” issues, management announced a plan in October that will improve profits by an estimated $1.7 billion over four years by cutting costs in its express unit. The company is also guided lower and now expects fiscal year 2013 profit of $6.00 to $6.20 versus previous projections of $6.20 to $6.60.

In the last quarter, Gurus for the most part have been bearish. Gurus selling or reducing their position in FedEx (FDX) include:

Food maker General Mills (GIS) reported EPS of $0.64 versus analyst estimates of $0.57. At the same time, the food maker raised its fiscal year EPS to $2.66 to $2.68 on a better operating environment but warned of higher costs on in-store merchandising. The company did not give a forecast for the current fourth quarter, saying only that earnings would be below those of the year-earlier period.

"We are continuing to see slow, but steady, improvement in the operating environment," said General Mills Chief Executive Officer Ken Powell. (Reuters)

There has not been much activity from Gurus in General Mills. It has long lacked a growth catalyst. The lone buyer of the food makers was Diamond Hill Capital, which added to its position. With the add, General Mills only represents 1.7% of the Diamond Hill portfolio.

Finally, shares of specialty retailer Williams-Sonoma (WSM) are mixed after the company reported EPS of $1.34 versus analyst estimates of $1.29. At the same time, the retailer increased its quarterly cash dividend to 31 cents a share and the board approved a $750 million stock repurchase program. The retailer was helped by fewer discounts and strong online sales during the holiday season. Williams-Sonoma is now projecting full-year earnings between $2.65 and $2.75.

Gurus who have purchased or added to an existing position in the specialty retailer include:

Disclaimer: None

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