It was a lackluster day of earnings, with FedEx and KB Homes offering little new insight from what they did previously. 😴
Starting with FedEx, the company’s earnings per share of $4.55 topped estimates of $3.71. However, $21.7 billion in sales missed expectations by a hair. Operating profit margins surprised to the upside, coming in at 7.3% vs. the 6% expected.
Driving the strength is not demand but continued cost-cutting and operational improvements. And the company expects that to continue driving results through the end of the year. It now expects to earn $17.00 to $18.50 per share in fiscal 2024, a narrowed range from $16.50 to $18.50. 🔺
As for demand, it revised its forecast lower, now expecting revenues to be flat YoY. It’s had a cautious outlook on spending and overall shipping demand for several quarters, and it looks like that is continuing.
For now, investors will take what they can get. Improving margins and earnings outweighed the lack of revenue growth, with $FDX shares rising 6% after hours. 📈
KB Home continues to face similar conditions as the broader industry. 🏘️
Revenues of $1.59 billion were down from $1.84 billion last year. More importantly, the company is facing margin pressure from both sides. On one side, home deliveries fell 7% YoY, and the average selling price down about 8% to $466,300. On the cost side, land and labor shortages and higher materials costs are also causing trouble.
With existing home inventory at historically low levels, buyers are opting for new homes. However, high prices and interest rates have pushed affordability to multi-decade lows.
That’s likely why the stocks have experienced an uptick in volatility as investors attempt to assess the various headwinds and tailwinds. 🤷
$KBH shares fell 2% after hours. 🔻
