FedEx (FDX) AI Stock Analysis

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FedEx

(NYSE:FDX)

71Outperform

FedEx presents a mixed outlook. Its strong financial performance, with robust cash flows and low leverage, is a significant strength. However, technical indicators show the stock is experiencing downward momentum, which could hinder short-term performance. The valuation remains attractive, but recent earnings call insights reveal challenges such as the expiration of a major contract and inflationary pressures, leading to a lowered EPS forecast. Investors should weigh these factors carefully.

Positive Factors

Cost Savings Initiatives

The company's cost transformation initiatives, such as Network 2.0 and the Tri-Color Initiative, are expected to significantly boost profits.

Share Valuation

FedEx shares are considered attractive due to a valuation reset, prompting an upgrade to a Buy recommendation based on compelling risk/reward.

Negative Factors

Earnings Outlook

The company lowered its earnings outlook, with management now expecting lower future earnings due to continued weakness and uncertainty in the U.S. industrial economy.

Guidance and Earnings Pressure

FY guidance cut will likely exacerbate concerns of structural pressures in the Parcel business, which may even overwhelm the DRIVE cost-out program.

Industrial Economy Impact

Management indicated that macroeconomic challenges are likely to persist, impacting the company's performance.

FedEx (FDX) vs. S&P 500 (SPY)

Market Cap

$52.19B

Dividend Yield2.53%

Average Volume (3M)1.80M

Price to Earnings (P/E)13.7

Beta (1Y)0.81

Revenue Growth0.34%

EPS Growth-8.45%

CountryUS

Employees306,000

SectorIndustrials

Sector Strength83

IndustryIntegrated Freight & Logistics

Share Statistics

EPS (TTM)4.51

Shares Outstanding239,598,920

10 Day Avg. Volume1,393,265

30 Day Avg. Volume1,801,727

Financial Highlights & Ratios

PEG Ratio8.79

Price to Book (P/B)1.96

Price to Sales (P/S)0.00

P/FCF Ratio15.21

Enterprise Value/Market Cap1.71

Enterprise Value/Revenue0.25

Enterprise Value/Gross Profit4.49

Enterprise Value/Ebitda2.04

Forecast

1Y Price Target

$282.67

Price Target Upside21.34% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering19

FedEx Business Overview & Revenue Model

Company DescriptionFedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The company's FedEx Express segment offers express transportation, small-package ground delivery, and freight transportation services; time-critical transportation services; and cross-border enablement, technology, and e-commerce transportation solutions. Its FedEx Ground segment provides day-certain delivery services to businesses and residences. The company's FedEx Freight segment offers less-than-truckload freight transportation services. As of May 31, 2022, this segment had approximately 30,000 vehicles and 400 service centers. Its FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection, and back-office support services. The company's Corporate, Other and Eliminations segment offers integrated supply chain management solutions, specialty transportation, customs brokerage, and global ocean and air freight forwarding services; and document and business services, as well as retail access to its customers for its package transportation businesses. FedEx Corporation was founded in 1971 and is based in Memphis, Tennessee.

How the Company Makes MoneyFedEx makes money primarily through its diverse range of delivery and logistics services, with its revenue model centered around three main segments: FedEx Express, FedEx Ground, and FedEx Freight. FedEx Express generates revenue through time-sensitive air and international shipping services, offering overnight and same-day deliveries. FedEx Ground focuses on cost-effective, day-definite delivery services within North America, primarily for e-commerce and business-to-business transactions. FedEx Freight provides less-than-truckload (LTL) freight services, catering to businesses with smaller shipment needs. Additionally, FedEx benefits from strategic partnerships with major retailers and e-commerce platforms, enhancing its service offerings and expanding its customer base. The company also leverages its logistics and supply chain management services to generate additional revenue, offering comprehensive solutions to streamline clients' operations.

FedEx Financial Statement Overview

Summary

FedEx's financial performance is commendable with strong profitability, low leverage, and solid cash flows. Despite slight dips in net profit margin and some missing data, the company maintains a stable financial position with efficient operations, making it well-positioned in the transportation industry.

Income Statement

Very Positive

FedEx demonstrates strong profitability with a healthy gross profit margin of 23.8% and a solid EBIT margin of 6.2% for TTM (Trailing-Twelve-Months). However, the net profit margin has slightly decreased to 4.5% from the previous annual report's 4.9%. Revenue growth is modest, indicating stability in revenue streams.

Balance Sheet

Positive

The balance sheet highlights a strong equity position with a debt-to-equity ratio of 0.27, suggesting low leverage. Return on equity is impressive at 6.0% for TTM, reflecting efficient use of equity. However, the equity ratio could not be calculated due to missing total assets data for TTM.

Cash Flow

Very Positive

FedEx's cash flow is robust with positive free cash flow growth of 9.4% for TTM. The operating cash flow to net income ratio of 1.84 indicates strong cash generation relative to income. However, the free cash flow to net income ratio of 0.88 suggests some room for improvement in free cash flow efficiency.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
87.81B	87.69B	90.16B	93.51B	83.96B	69.22B
	Gross Profit
19.87B	18.95B	19.17B	20.17B	17.95B	13.34B
	EBIT
5.41B	5.56B	4.91B	6.25B	5.86B	3.29B
	EBITDA
10.84B	10.87B	10.60B	9.77B	11.75B	6.34B
	Net Income Common Stockholders
3.92B	4.33B	3.97B	3.83B	5.23B	1.29B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.21B	6.50B	6.82B	6.90B	7.09B	4.88B
	Total Assets
85.04B	87.01B	87.11B	85.99B	82.78B	73.54B
	Total Debt
37.03B	37.72B	38.33B	37.19B	36.46B	36.12B
	Net Debt
31.90B	31.22B	31.51B	30.30B	29.38B	31.24B
	Total Liabilities
58.34B	59.42B	61.02B	61.05B	58.61B	55.24B
	Stockholders Equity
26.71B	27.58B	26.09B	24.94B	24.17B	18.30B
Cash Flow		Free Cash Flow
3.43B	3.14B	2.64B	3.07B	4.25B	-771.00M
	Operating Cash Flow
7.21B	8.31B	8.81B	9.83B	10.13B	5.10B
	Investing Cash Flow
-3.89B	-5.20B	-6.17B	-6.82B	-6.01B	-5.85B
	Financing Cash Flow
-3.76B	-3.43B	-2.60B	-3.02B	-2.09B	3.38B

FedEx Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price232.95

Price Trends

50DMA

226.92

Positive

100DMA

247.27

Negative

200DMA

263.45

Negative

Market Momentum

MACD

-0.79

Negative

RSI

61.90

Neutral

STOCH

80.61

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FDX, the sentiment is Neutral. The current price of 232.95 is above the 20-day moving average (MA) of 212.82, above the 50-day MA of 226.92, and below the 200-day MA of 263.45, indicating a neutral trend. The MACD of -0.79 indicates Negative momentum. The RSI at 61.90 is Neutral, neither overbought nor oversold. The STOCH value of 80.61 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FDX.

FedEx Risk Analysis

FedEx disclosed 30 risk factors in its most recent earnings report. FedEx reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

FedEx Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ZTO	78 Outperform	$15.20B	12.79	14.46%	3.63%	12.67%	-0.32%
EXPD	74 Outperform	$14.94B	18.11	37.70%	1.34%	24.07%	27.40%
FDX	71 Outperform	$52.19B	13.68	14.74%	2.53%	0.34%	-8.45%
UPS	71 Outperform	$81.20B	13.99	35.96%	6.81%	1.30%	-0.76%
CHRW	70 Outperform	$11.39B	22.92	32.11%	2.78%	-0.22%	65.52%
JBHT	69 Neutral	$13.44B	24.61	13.97%	1.28%	-3.82%	-12.80%
Sector *	64 Neutral	$4.36B	12.05	5.23%	249.94%	4.13%	-10.23%

* Industrials Sector Average

Performance Comparison

FDX

FedEx

232.95

-28.47

-10.89%

CHRW

CH Robinson

95.95

13.59

16.50%

EXPD

Expeditors International

116.08

-0.12

-0.10%

JBHT

JB Hunt

148.72

-18.86

-11.25%

UPS

United Parcel

101.21

-43.61

-30.11%

ZTO

ZTO Express

19.00

-2.02

-9.61%

FedEx Earnings Call Summary

Earnings Call Date:Mar 20, 2025

(Q3-2025)

% Change Since: -5.39%|

Next Earnings Date:Jun 24, 2025

Earnings Call Sentiment Neutral

FedEx demonstrated strong revenue growth and cost savings in Q3, along with notable achievements in its European and healthcare segments. However, challenges such as the expiration of the US Postal Service contract, weak industrial economy, and inflationary pressures have impacted the company's outlook, leading to a lowered EPS forecast.

Q3-2025 Updates

Positive Updates

Revenue Growth

FedEx achieved a 2% year-over-year revenue growth for the first time this fiscal year, driven by increased volume at Federal Express.

Cost Savings

The company achieved $600 million in DRIVE savings in Q3 and expects to reach a total of $2.2 billion in savings for FY ‘25.

Operating Income Growth

Adjusted operating income grew by 12% year-over-year, with a 17% increase at Federal Express despite headwinds from the expiration of the United States Postal Service contract.

European Market Progress

FedEx Europe achieved its best service levels in years, contributing to $600 million in DRIVE savings by the end of the fiscal year.

Acquisition of RouteSmart Technologies

FedEx acquired RouteSmart Technologies to enhance its route optimization capabilities, supporting Network 2.0 and global network transformation.

Growth in Healthcare Segment

FedEx is onboarding nearly $400 million in new annualized healthcare revenue and expects to exit FY ‘25 with approximately $9 billion in healthcare revenue.

Negative Updates

US Postal Service Contract Expiration

The expiration of the contract resulted in a $180 million headwind to adjusted operating income in Q3.

Weak Industrial Economy

Continued weakness in the industrial economy pressured higher-margin B2B volumes, impacting FedEx Freight with a 5% revenue decline.

Inflationary Pressures

Higher-than-expected inflationary pressures on the cost base contributed to a reduced FY ‘25 adjusted EPS outlook.

Lowered EPS Outlook

FedEx lowered its FY ‘25 adjusted EPS outlook from $19-20 to $18-18.60 due to uncertain demand and higher inflationary pressures.

Company Guidance

During FedEx's third-quarter fiscal 2025 earnings call, the company provided guidance highlighting a 2% increase in revenue and a 12% growth in adjusted operating income year-over-year, despite significant challenges such as the expiration of the United States Postal Service contract and severe weather events. The company achieved $600 million in DRIVE savings for the quarter, contributing to its goal of a $2.2 billion annualized run rate by fiscal year-end. FedEx also discussed the impact of a weak industrial economy, particularly on its higher-margin B2B volumes, while emphasizing its readiness to capture incremental flow-through upon economic recovery. The guidance included a revised adjusted EPS outlook for FY '25, lowered to $18 to $18.60 due to uncertain demand and higher inflationary pressures. FedEx's strategic focus remains on transforming its network, including Network 2.0 and Tricolor initiatives, which are expected to enhance efficiency and support new market growth opportunities. The company's capital allocation strategy includes a $4.9 billion CapEx plan for FY '25, with significant investments in fleet modernization and a commitment to returning $3.8 billion to shareholders through dividends and share repurchases.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.