CNBC’s Jim Kramer on Friday explained why he was positive Fedex After the company surprised Wall Street with a strong quarter, it said it was able to effectively cut costs and adapt to the changing global commercial environment.
“Even in harsh environments, FedEx was able to blow the numbers off last night and see how they pulled it apart, I have to tell you, I’m careful and optimistic that this hasn’t been done and is getting higher,” he said.
As President Donald Trump’s widespread tariff hikes support global trade, FedEx and its peers have seen their shares fall. Cramer said FedEx stocks didn’t fully recover from last spring after Trump issued the first round. Entering the quarter, FedEx has fallen nearly 20% since the start of the year, and the company has overcome several downgrades as Wall Street analysts are widely concerned about the health of the economy and shipping industry.
However, the shipping giant was driven by the strength of the Core FedEx Express business and reported revenue and revenue beats on Thursday night. Stocks rose more than 5% in extended trading, and by the end of Friday it had risen more than 2%.
For Cramer, management’s attitude towards the overall operating environment was more positive than investors expected. He said the company seemed constructive and realistic about tariffs and weak issues in the industrial economy. Cramer also said FedEx has been focusing for months on dealing with fallout from Trump’s executive order that disabled the “De Minimis Exception,” which allowed shipments under $800 to enter US tax exemptions.
He said FedEx appears to be gaining market share in the industry, partly due to improved customer service. However, Cramer has shown that the key to a firm quarter is an initiative to manage costs. FedEx makes the delivery process more efficient, remove stations from the network and reduces overall pickup time without upsetting customers in both the US and Europe.
Cramer called FedEx stocks cheaper than their full-year earnings forecast, and wondered whether the company’s outlook would look conservative in retrospect.
“FedEx also pays a respectable 2.5% dividend yield and unlike UPS, where the yield is more than three times that level, there’s no need to worry that FedEx will have to cut it,” he said. “This dividend is safe.”
FedEx did not respond to requests for comment immediately.
