FedEx Corporation

FDX Details

FedEx Company offers a variety of delivery, e-commerce, and commercial services through firms that operate independently and in competition with one another under the FedEx name. FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services are among the company's segments.

Financial Results

• FDX reported the consolidated results for the third quarter ended February 28, 2023. Q3 results were negatively affected by the continued demand weakness, mainly at FedEx Express. Addiotnally, operating income was negatively affected by the effects of global inflation, partially offset by U.S. domestic yield improvement as well as cost-reduction actions.
• The company posted revenue of $22.2 billion (as reported) (GAAP) in Q3 FY 2023 as compared to $23.6 billion in Q3 FY 2022 (as reported) (GAAP).
• The company is advancing the global transformation through DRIVE. Through DRIVE, FDX is expecting to achieve over $4 Bn in the annualized structural cost reductions by fiscal 2025 end.

Outlook

For fiscal 2023, FDX is expecting earnings per diluted share of $13.80 - $14.40 before the MTM retirement plans accounting adjustments as compared to the prior forecast of $12.50 to $13.50 per diluted share.

Key Risks

Potential risks as well as uncertainties include the economic conditions in the global markets, the effect of the COVID-19 pandemic, geopolitical tensions, etc.

Fundamental Valuation

EV/Sales Multiple Based Valuation

Stock Recommendation

The stock has been valued using EV/Sales multiple-based illustrative relative valuation and the target price so arrived reflects a decline of low double-digit (in % terms). A slight discount has been applied to EV/Sales multiple-based (NTM) (Peer Average) considering geopolitical risks, global economic slowdown, etc.

Considering the current trading levels, risks associated as well as volatile market conditions on the back of rising interest rates, a ‘Sell’ rating is assigned to the “FDX” at the current market price of USD 235.52 per share (as of 05 April 2023, at 06:35 am PDT). 

Technical Overview:

Markets are trading in a highly volatile zone currently due to certain macroeconomic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for share price chart is based on 5 April 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.