![\"Mediocre](\"http:\/\/www.profitconfidential.com\/wp-content\/uploads\/2013\/06\/210613_PC_clark.jpg\" "\\"Mediocre")
<\/a>The business of freight is always a benchmark.<\/p>\nFedEx Corporation (FDX) reported its fiscal fourth-quarter numbers that can only be described as mediocre. The stock went up on the news.<\/p>\n
The company<\/a> reported that its fourth-quarter sales grew four percent to $11.4 million, while earnings dropped 45% to $303 million, compared to its $550 million a year ago. Earnings per share fell similarly from $1.73 to $0.95.<\/p>\n FedEx noted that international customers were opting for less premium freight services, which is what affected the company\u2019s earnings. The company is retiring older planes and undertaking voluntary employee buyouts, which added to costs.<\/p>\n FedEx\u2019s earnings results are emblematic of the softness in the eurozone marketplace. The company increased its adjusted earnings forecast for fiscal 2014, but it was a little bit short of existing consensus.<\/p>\n The company\u2019s share price went up on its earnings<\/a> release day, when the broader stock market finished a full one percent lower. United Parcel Service, Inc. (UPS) reports in another month.<\/p>\n FedEx\u2019s four-percent revenue gain wasn\u2019t bad for such a large, mature enterprise. Noticeable in the company\u2019s numbers were a 10% reduction in fuel costs and a 25% jump in purchased transportation expenses.<\/p>\n Like many corporations, the company\u2019s cash balance increased to $4.9 billion, up from $2.8 billion (partially due to $1.74 billion in new long-term debt).<\/p>\n International air freight was the real weak point in the most recent quarter. U.S. total freight revenues were slightly positive. The company\u2019s long-term stock chart is featured below:<\/p>\n Chart courtesy of www.StockCharts.com<\/i><\/p>\n Given the company\u2019s modest earnings report and the weakness apparent in international markets, I\u2019d say the stock is expensively priced, with a price-to-earnings ratio of approximately 18.<\/p>\n Weakness abroad is an ongoing theme, and the fact that international customers are moving their business away from higher-margin priority shipping is worrisome. It\u2019s something I\u2019m sure FedEx doesn\u2019t want to see continue.<\/p>\n It\u2019s very early days for this earnings season, but already, mediocrity stands out. The stock market\u2019s action has been all about the Fed, but now it\u2019s time for the bread and butter; if the numbers continue like this, stocks should pull back. (See \u201cAction in Dow Jones Transports, Utilities Signaling Caution<\/a>.\u201d)<\/p>\n The marketplace knows that there\u2019s been a reduction in second-quarter earnings expectations on the part of Wall Street analysts. There have also been a few earnings warnings from corporations.<\/p>\n Considering how far the stock market has come since the beginning of the year, it\u2019s very difficult to get enthusiastic about second-quarter earnings season yet.<\/p>\n A prolonged break in the main market indices is overdue.<\/p>\n![\"FedEx](\"http:\/\/www.profitconfidential.com\/wp-content\/uploads\/2013\/06\/FedEx-Corporation-Chart.jpg\" "\\"FedEx")
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