Traders will be hard-pressed to recall when was the last time FedEx (FDX) reported earnings that sent its stock higher. And while they are thinking, we can be certain that it won't be today because one day after FedEx got a kick in the groin from Amazon which stopped using the company's ground shipping services for its various third-party sellers, the company was hit with a one-two punch when it reported yet another disastrous earnings report, in which it not only missed earnings but also cut profits.

First, the historicals, which were for lack of a better word, deplorable (relative to already lowered expectations). Specifically, FedEx reported 2Q numbers as follows:

• Adjusted EPS $2.51 vs. $4.03 y/y, estimate $2.78 (range $2.57 to $3.21) (BD)
• Adjusted operating margin 3.9% vs. 7.50% y/y, estimate 5.35% (Bloomberg MODL)
• Revenue $17.3 billion, estimate $17.66 billion (range $16.22 billion to $18.13 billion) (BD)

But if the historicals were ugly, it was the forecast that was downright disastrous:

• FedEx now forecasts fiscal 2020 earnings of $9.10 to $10.35 per diluted share and earnings of $10.25 to $11.50 per diluted share before the year-end MTM retirement plan accounting adjustment. Previously, the company had seen $11-$13, while the sell-side estimate is $12.05.
• In other words, the midline of the company guidance is almost a dollar below both its own and the street's estimates.
• Additionally, and less importantly, FedEx also sees a full-year capex of $5.9 billion, the same as its prior forecast and just above the sell-side estimate $5.88 billion. Here one could ask if earnings are set to slide, why the company didn't also cut its CapEx, and the likely answer is it can't as it has to spend more and more just to keep EPS in roughly the same place.

Commenting on the ugly forecast, FedEx CFO Alan B. Graf said that "our revised guidance reflects lower-than-expected revenue at each of our transportation segments and higher-than-expected expenses driven by a continued mix shift to residential delivery services. In response, we are implementing reductions to the global FedEx Express air network to better match capacity with demand. We are also further restricting hiring and pursuing opportunities to optimize our networks, including investments in technology aimed at improving our productivity and lowering our costs."

Finally, it just may turn out that the company's forecast may have to be cut again, as FedEx writes that "these forecasts assume moderate U.S. economic growth, the company’s current fuel price expectations, no further weakening ininternational economic conditions from the company’s current forecast and no additional adverse developments in international trade policies and relations."

Good luck with all those assumptions, guys.

It was not immediately clear how much of an impact Amazon's decision to fully phase out FedEx would have, but the market didn't care to find out, and FedEx stock tumbled over 7% after hours, in the process dragging UPS shares some 2% lower as well.

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