FedEx's "Network Inefficiencies"

Plus, Chipotle's new menu item.

Steven Lerner
Steven Lerner

Today is Wednesday, September 22, 2021.

FedEx's "Network Inefficiencies" Destroy Earnings

Shares of FedEx (NYSE: FDX) dropped 4.89% in after-hours trading after the shipping giant reported disappointing earnings results.

Numbers: Although the company’s quarterly revenue of $22 billion beat analyst projections by about $140 million, it missed the earnings projection by about $0.55 per share.

What Happened: CEO Frederick W. Smith attributed the underwhelming earnings to the current labor shortage and issues with global supply chains. In a press release, the company cited “network inefficiencies” due to higher wages and an unexpected $450 million increase in operating expenses. The company also expects supply chain disruptions to slow down some delivery services.

What’s Next: FedEx said that it is focused on its peak season ahead, AKA the holidays, by making investments in resources to meet the needs of customers. Can the company keep up with demand?

Data: Shares of FedEx are down 8% in the past six months. The stock also has a low price-to-earnings ratio, which means it is a good value.

Bigger Picture: FedEx raised some shipping rates on Monday.

Final Thoughts: FedEx can’t be the only company suffering from the labor market shortage.


Notable Earnings Today: General Mills (NYSE: GIS), Blackberry (NYSE: BB), H.B. Fuller (NYSE: FUL), KB Homes (NYSE: KBH), Steelcase (NYSE: SCS).

Notable IPOs Today: Toast (NYSE: TOST), VersaBank Common Shares (Nasdaq: VBNK), Freshworks Inc. Class A Common Stock (Nasdaq: FRSH), Sterling Check Corp. (Nasdaq: STER), A.K.A. Brand Holdings (NYSE: AKA).

Notable Equity Crowdfunding Campaigns Ending Today: festivalpass (StartEngine), Saucy Brew Works (StartEngine), Bloom Stack (Wefunder), Artisanal Distillates (StartEngine), Island Brands (StartEngine), wOS (Wefunder).

Notable Economic Events Today: Existing Home Sales (8:30 a.m. ET), Crude Oil Inventories (10:00 a.m. ET), FOMC Economic Projections and Statement (2:00 p.m. ET), FOMC Press Conference (2:30 p.m. ET).

Chipotle’s Brisket Experiment Tastes Good For Investors

Shares of Chipotle Mexican Grill (NYSE: CMG) ticked up 0.69% Tuesday after the fast-casual restaurant introduced new meat to its menu.

Something New: Smoked brisket will be part of Chipotle’s menu for a limited time in select locations starting the week, the company announced Tuesday. It had been testing out the new meat in Ohio and California since last year.

Bigger Picture: It’s hardly the first time that a fast-food restaurant has embraced alternative food items. From pumpkin pies at McDonald’s (NYSE: MCD) to cheeseburger pizzas at Dominio’s (NYSE: DPZ), these trendy experiments have been great for customers and investors.

Numbers: Chipotle’s stock is up 43% this year. The stock does have a high price-to-earnings ratio and is not a value stock.

Final Thoughts: Chipotle stock has proven to be good, even during the pandemic.

Investors Turn To Treasury Inflation-Protected Securities

With retail investors concerned about inflation, Treasury Inflation-Protected Securities (TIPS) have emerged into the spotlight.

Data: 43% of investors are thinking about making portfolio moves due to the changes in interest rates, according to a survey from E*TRADE in August.

Definition: TIPS, a category of U.S. Treasury Bonds, are by their very definition used to provide protection against inflation. The principal of a TIPS goes up on inflation or down based on deflation.

The Good: When the TIPS matures, investors will get more than what they paid.

The Bad: If there’s deflation, investors get less than what they paid. Plus, the interest rates are low.

Final Thoughts: The outlook for TIPS could change, especially if the Federal Reserve begins tapering.

Insights: Fear & Greed Index suggests Bitcoin's price is undervalued (Cointelegraph)

Magic Slipping: Disney+ Subscriber Growth Slows Down (The Wall Street Journal)

Driving Profitability: Uber Stock Rises as Ride-Hailing Giant Hints at Third-Quarter Profitability (Barron’s)

About Time: China Evergrande unit will make onshore bond coupon payments on Sept 23 (Reuters)

Can’t Photoshop This: Adobe Posts Strong Earnings. Why It Wasn’t Enough to Boost the Stock. (Barron’s)

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