Question

Returning home from your job as a financial analyst covering the airline industry, you find a message from your father, a retired Federal Express (FedEx) pilot. He will be in town this evening and would like you to join him for dinner. He needs your investment advice. Having been with FedEx, he is ecstatic over an article he spotted on BusinessWeek Online.
FedEx announced first quarter net income of $1.53 per share, up 39% from the $1.10 per share the company earned in the same quarter last year. FedEx also raised its forecasted earnings for the year from $6.30 to $6.65 per share. Despite this good earnings news, the stock price fell nearly 2%.

Required:
Explain to your father why the price of FedEx shares might have fallen on the earnings announcement date.



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  • CreatedSeptember 10, 2014
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