CNBC's Jim Cramer on Friday explained why he's positive on FedEx after the company surprised Wall Street with a strong quarter, saying the company has managed to cut costs effectively and adapt to a changing global commerce landscape.
"Even in a tough environment, FedEx managed to blow away the numbers last night, and looking at how they pulled that off, I've got to tell you, I am cautiously optimistic that this one is not done and is going higher," he said.
As President Donald Trump's widespread tariff hikes upend global trade, FedEx and its peers have seen their shares fall. Cramer noted that FedEx stock hadn't fully recovered from its downturn last spring after Trump issued the first round of sweeping tariffs. Going into the quarter, FedEx was down nearly 20% year-to-date, and the company weathered a few downgrades as Wall Street analysts worried broadly about the health of the economy and the shipping industry, he added.
However, the shipping giant reported an earnings and revenue beat Thursday night, driven by strength in its core FedEx Express business. The stock jumped more than 5% in extended trading, and by Friday's close, it was up over 2%.
To Cramer, management's attitude towards the overall operating environment was more positive than investors might have expected. He said the company seemed both constructive and realistic about challenges posed by tariffs and a weaker industrial economy. Cramer also said FedEx has been focused for months on dealing with the fallout from Trump's executive order that nullified the "de minimis exception," which had allowed shipments under $800 to enter the U.S. duty-free.
He said it seems FedEx is taking market share in the industry, attributing that in part to improved customer service. But Cramer indicated that the key to company's solid quarter was its initiatives to manage costs. FedEx is making shipping processes more efficient — removing stations from its network and reducing the number of pick-up times overall — without upsetting customers, both in the U.S. and Europe, he added.
Cramer called FedEx's stock inexpensive compared to its full-year earnings forecast, and he wondered if the company's outlook will end up looking conservative in retrospect.
"FedEx also pays a respectable 2.5% dividend yield and, unlike UPS, whose yield is more than three times that level, I have no worries that FedEx is going to have to cut it," he said. "This dividend is safe."
FedEx did not immediately respond to request for comment.
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