Dom Chu (Anchor) 00:00.070
now let's get back to fedex those shares are moving higher up about a percent after reporting second quarter results joining me now is brandon oglenski from barclays what's most eye catching about this report there's some cost things we know about that they've been working on
Dom Chu (Anchor) 00:14.670
but priority seemed to be working
Brandon Oglenski (Senior Equity Analyst) 00:18.350
yeah john thanks for having us on here i mean i think a few things going on here for fedex and we'll get to the company specific in one minute but all investors kind of link to this one especially with how they're off calendar and what we saw today with the report is you know
Brandon Oglenski (Senior Equity Analyst) 00:30.590
increased domestic package volumes which i think speak well to the idea that maybe the domestic economy is on pretty solid footing here and then obviously specific to the company you spoke to it i mean they're getting a lot of price traction importantly they're merging their
Brandon Oglenski (Senior Equity Analyst) 00:44.470
express and ground networks so margins came in higher on the package side than i think most people are looking for and the company did raise the annual guide for revenue growth of five to six percent i think they've been looking previously for like four to six and they tightened
Brandon Oglenski (Senior Equity Analyst) 00:57.790
up other EPS range at the high end as well so lots of things to like here especially as you look into next year they're spinning off their freight LTL business which i think a lot of investors had been skeptical that could drive value but as we get closer at date i think people
Brandon Oglenski (Senior Equity Analyst) 01:12.110
are realizing there's a lot to be had from fedex here well
Dom Chu (Anchor) 01:15.390
i was talking about that one year chart on fedex are we out of the hole because it looks like if we zoom out to a year there was indeed a hole to climb out of and maybe the stock just in the last few trading sessions popped out of it yeah
Brandon Oglenski (Senior Equity Analyst) 01:30.150
i mean i agree here look if you're putting the bottom on that chart that's liberation day when i think all of us in the US felt very liberated but nonetheless what we're seeing here is a company that's really on a transformative journey again they used to run a separate express
Brandon Oglenski (Senior Equity Analyst) 01:44.950
and ground delivery operations that's twenty percent integrated as we sit here today they want to be forty percent integrated in the US i think by next may and then close to a hundred percent about a year to eighteen months from now so there's more cost efficiencies more margin
Brandon Oglenski (Senior Equity Analyst) 01:58.950
upside come here and maybe unlike the nike story that we're hearing right now like we're in the later innings of this where we're seeing pricing upside and margin upside from the company so as we look into twenty twenty six this is one of our our best stocks we recommended six
Brandon Oglenski (Senior Equity Analyst) 02:11.670
to seven stocks just yesterday and fedex being one of them just because they're spinning off that freight business and going to benefit from these network integrations that they're pursuing
Dom Chu (Anchor) 02:21.150
any particular pothole you're looking out for in the first part of the year for fedex
Brandon Oglenski (Senior Equity Analyst) 02:26.870
you know what they have a lot of leverage to international trade and that definitely hit their earnings you know a couple quarters ago when we did away with the de minimis rule and obviously the tariffs have hit them pretty hard i think their asia to US business is down like
Brandon Oglenski (Senior Equity Analyst) 02:39.430
twenty percent so there's a lot of incremental margin there but i think they've done pretty good job addressing that on the cost side now so you know anything can happen in transports especially fedex but i think we're shaping up for a pretty
Dom Chu (Anchor) 02:51.110
good twenty twenty six yeah