There were two recent earnings reports that I want to highlight. The reason is that one was very good while the other wasn’t so good, and that underscores the nature of today’s market. Some companies and sectors will be big winners while others will be left behind.
The first was from FedEx (FDX) which had an awful fiscal third quarter. Sales dropped by 14% and earnings plunged by 75%. The company also announced job cuts but it didn’t specify how many.
FedEx is important to watch because their business is a good barometer of the health of the broader economy. Fred Smith, the CEO, said, “We probably have hit bottom.” I’m not so sure. Nine months ago, I listed FedEx as one of 23 stocks to sell and the shares are down over 40% since. I still rate FedEx a sell.
The other earnings report came from Oracle (ORCL). Unlike FedEx, Oracle had good news to report. The software company earned 35 cents a share which beat Wall Street’s estimates by three cents a share. The stock is having one of its best days in years.
The part that’s interesting is that Oracle will pay its first-ever dividend. It’s only five cents a share but I think this is a smart move on Oracle’s part. Investors want the certainty of dividends right now. Oracle remains a buy.