|
Related Topics
|
Category: Stock Market and FedEx Corporation (FDX)
Date: 21 September 2020 Stock Price of Fedex: $242.78 We take a look at the 1st quarter earnings release of their 2021 fiscal year of FedEx Corporation one of the world's leading logistics services companies with revenues of almost $70 billion in their 2019 fiscal year. For the 1st quarter 2021 Fedex reported revenues of $19.3 billion and net income of $1.28 billion. A very solid set of results for Fedex.
|
Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies - Frederick W. Smith, FedEx Corp. chairman and CEO"
About FedEx Corporation
FedEx has grown tremendously since its first night of operations in 1973. Now FedEx serves more than 220 countries and territories and continues to offer new products and services around the globe. FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenue of $69 billion, the company offers integrated business solutions through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 500,000 team members to remain focused on safety, the highest ethical and professional standards and the needs of their customers and communities
Overview FedEx's 1st quarter 2021 earnings report
The numbers we are interested in (for the quarter):
- Revenue: $19.3 billion (up strongly compared to $17.05 billion from the same quarter of the previous year)
- Net loss: $1.245 billion (up strongly from $745 million for the same quarter of the previous year)
- Diluted earnings per share: $4.72 (up strongly from $2.84 for the same quarter of the previous year)
- PE ratio of FedEx: 12.8
- PE ratio of FedEx: 12.8
- Dividend declared: $1.30
- Dividend yield of Fedex: 2.1%
- Dividend yield of Fedex: 2.1%
- Number of shares in issue: 262 million
- Cash and cash equivalents of FedEx: $6.954 billion (up from $4.881 billion for the same quarter of the previous year)
- Cash and equivalents per share: $26,53
- Cash and equivalents makes up 10.9% of FedEx's current market capital
- Cash and equivalents makes up 8.9% of FedEx's total assets
- Stockholders equity of FedEx: $19.462 billion
- Stockholders equity per share: $74.28
- FedEx is trading at 3.2 times its stockholders equity per share. It is trading within the expected range that most firms tend to trade at which is levels between 2 and 4 times its stated stockholders equity per share.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
- Cash generated from operations: $2.651 billion
- Cash generated from operations per share: $10.11
FedEx's management commentary on their 4th quarter 2020 earnings
MEMPHIS, Tenn., September 15, 2020 ... FedEx Corp. today reported the following consolidated results for the first quarter ended August 31
“Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “I would like to thank our team members whose efforts during this time have helped keep the world’s health care, industrial and at-home supply chains moving despite the challenges of the global pandemic.”
Operating results increased due to volume growth in FedEx International Priority and U.S. domestic residential package services, yield improvement at FedEx Ground and FedEx Freight, and one additional operating weekday. These factors were partially offset by costs to support strong demand and to expand services, variable compensation expenses, and COVID-19 related costs incurred to ensure the safety of FedEx team members and customers.
“Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “I would like to thank our team members whose efforts during this time have helped keep the world’s health care, industrial and at-home supply chains moving despite the challenges of the global pandemic.”
Operating results increased due to volume growth in FedEx International Priority and U.S. domestic residential package services, yield improvement at FedEx Ground and FedEx Freight, and one additional operating weekday. These factors were partially offset by costs to support strong demand and to expand services, variable compensation expenses, and COVID-19 related costs incurred to ensure the safety of FedEx team members and customers.
Outlook
FedEx is not providing an earnings forecast for fiscal 2021. The capital spending forecast for the year is up $200 million to $5.1 billion, driven by additional capacity initiatives to support increased volume levels.
“While business demand improved in the first quarter, continued uncertainties cloud our ability to forecast full-year earnings,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “However, we expect to continue to benefit from our strong position in the U.S. and international package and freight markets, yield improvement opportunities and cost management initiatives.”
FedEx is not providing an earnings forecast for fiscal 2021. The capital spending forecast for the year is up $200 million to $5.1 billion, driven by additional capacity initiatives to support increased volume levels.
“While business demand improved in the first quarter, continued uncertainties cloud our ability to forecast full-year earnings,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “However, we expect to continue to benefit from our strong position in the U.S. and international package and freight markets, yield improvement opportunities and cost management initiatives.”
FedEx (NYSE: FDX) stock price history
The image below, obtained from Google, shows the stock price history of FedEx (NYSE: FDX) over the last 5 years. And it's been a good time for FedEx stockholders. 5 years ago the stock of FedEx was trading at $145 a stock, and its currently it's trading at $242.
That's a pretty strong return of 67.4% provided to FDX stockholders over the last 5 years. The stock of FedEx trading at a lot closer to its 52 week high of $256.18 than it is to its 52 week low of $88.69 which to us is a clear indication that the short term sentiment and momentum of the stock is relatively positive at this point in time.
That's a pretty strong return of 67.4% provided to FDX stockholders over the last 5 years. The stock of FedEx trading at a lot closer to its 52 week high of $256.18 than it is to its 52 week low of $88.69 which to us is a clear indication that the short term sentiment and momentum of the stock is relatively positive at this point in time.
Fedex (FDX) stock vs United Parcel Service (UPS) stock over the lat 5 years
The image below shows the stock price performance of Fedex (FDX) and United Parcel Service (UPS) over the last 5 years. Both logistics firms have had a pretty strong run after initial coronavirus related sell offs in their stock price. The summary below shows the stock price returns of Fedex and UPS over the last 5 years:
While the stock price trends and the returns are very similar over the last 5 years, it is Fedex (FDX) that takes out the win from United Parcel Service over the last 5 years.
- Fedex (FDX): 67.4%
- United Parcel Service: 53.8%
While the stock price trends and the returns are very similar over the last 5 years, it is Fedex (FDX) that takes out the win from United Parcel Service over the last 5 years.
Recent coverage of FedEx (FDX)
The extract below covers the latest earnings reported by FedEx as obtained from Forbes.com
After roughly an 85% rise since the March 23 levels of this year, at the current price of around $208 per share we believe the stock price of FedEx -0.5%FDX (NYSE: FDX), one of the world’s largest parcel delivery companies, has reached its near term potential. FDX stock has rallied from $110 to $208 off the recent bottom compared to the S&P which moved over 50%, with the resumption of economic activities as lockdowns are gradually lifted. FDX stock is also up 32% from levels seen in late 2018.
FDX stock has not only fully recovered to the level it was at before the drop in February due to the coronavirus outbreak becoming a pandemic, it is now up 30% from the pre-crisis levels. This seems to make it fully valued, despite the company seeing an increase in shipments over the recent months.
Some of the 32% rise of the last 2 years is justified by the roughly 6% growth seen in FedEx’s revenues from fiscal 2018 to 2020 (fiscal ends in May), though earnings were down 38% due to a 44% net margin contraction from 6.4% to 3.3%. Higher insurance costs and competitive pricing are some of the factors that contributed to this decline.
Despite the company posting an earnings decline in fiscal 2020, its P/E multiple has expanded. We believe the stock is unlikely to see significant upside after the recent rally and the potential weakness from a recession driven by the Covid outbreak. Our dashboard, “What Factors Drove 32% Change in FedEx Stock between 2017 and now?“, has the underlying numbers.
FedEx’s P/E multiple remained at around 10x in 2018 and 2019 based on trailing earnings. While the company’s P/E is now at 22x given the recent rally, there is a downside when the current P/E is compared to levels seen in the past years, P/E of 10x at the end of 2018 and 2019.
Read the full article here
After roughly an 85% rise since the March 23 levels of this year, at the current price of around $208 per share we believe the stock price of FedEx -0.5%FDX (NYSE: FDX), one of the world’s largest parcel delivery companies, has reached its near term potential. FDX stock has rallied from $110 to $208 off the recent bottom compared to the S&P which moved over 50%, with the resumption of economic activities as lockdowns are gradually lifted. FDX stock is also up 32% from levels seen in late 2018.
FDX stock has not only fully recovered to the level it was at before the drop in February due to the coronavirus outbreak becoming a pandemic, it is now up 30% from the pre-crisis levels. This seems to make it fully valued, despite the company seeing an increase in shipments over the recent months.
Some of the 32% rise of the last 2 years is justified by the roughly 6% growth seen in FedEx’s revenues from fiscal 2018 to 2020 (fiscal ends in May), though earnings were down 38% due to a 44% net margin contraction from 6.4% to 3.3%. Higher insurance costs and competitive pricing are some of the factors that contributed to this decline.
Despite the company posting an earnings decline in fiscal 2020, its P/E multiple has expanded. We believe the stock is unlikely to see significant upside after the recent rally and the potential weakness from a recession driven by the Covid outbreak. Our dashboard, “What Factors Drove 32% Change in FedEx Stock between 2017 and now?“, has the underlying numbers.
FedEx’s P/E multiple remained at around 10x in 2018 and 2019 based on trailing earnings. While the company’s P/E is now at 22x given the recent rally, there is a downside when the current P/E is compared to levels seen in the past years, P/E of 10x at the end of 2018 and 2019.
Read the full article here
FedEx (NYSE: FDX) latest stock valuation
So based on FedEx (FDX) latest earnings report and their outlook provided what do we value FedEx's stock at? Based on their latest earnings and the outlook provided by the group our target price (full value price) for FedEx is sitting at $254.10 a stock (up strongly from our 4Q 2020 earnings report review of FedEx). We therefore believe the stock of FedEx is slightly undervalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $254.10 Therefore we believe the a good entry point into the stock is below $228.70. We expect the stock of FedEx to kick up slightly in coming weeks and months to levels closer to our target price.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $254.10 Therefore we believe the a good entry point into the stock is below $228.70. We expect the stock of FedEx to kick up slightly in coming weeks and months to levels closer to our target price.
Next earnings release of FedEx
It is expected that FedEx (FDX) will release their 2nd quarter 2021 earnings report in late December 2020