FedEx Corp (FDX, Financial) recently experienced a daily loss of -12.05%, adding to a three-month loss of -1.13%. Despite these setbacks, the company maintains a robust Earnings Per Share (EPS) of 16.88. Such figures prompt investors to question: is FedEx fairly valued? This article delves into the valuation analysis of FedEx, offering investors a clear picture of its current market standing.
Company Introduction
FedEx Corp (FDX, Financial), a pioneer in overnight delivery since 1973, stands as the world's largest express package provider. In fiscal year 2023, FedEx generated 47% of its revenue from its express division, followed by 37% from ground services, and 11% from its freight segment. The company's acquisition of TNT Express in 2016 expanded its global parcel delivery capabilities. With a current stock price of $246.25 and a Fair Value (GF Value) of $252, we are set to explore whether FedEx's market value aligns with its intrinsic value.
Summarize GF Value
The GF Value is a unique measure reflecting the intrinsic value of a stock. It is calculated using a combination of historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. FedEx (FDX, Financial) is currently deemed fairly valued according to this method. The stock's future returns are likely to align closely with its business growth, given that it is trading near the GF Value Line. This suggests a stable investment outlook for those considering adding FedEx to their portfolio.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
Investing in companies with robust financial strength is crucial to minimize the risk of capital loss. FedEx's financial strength is fair, with a cash-to-debt ratio of 0.19, placing it in a challenging position compared to industry peers. Nonetheless, its overall financial strength score of 6 out of 10 suggests a stable financial foundation.
Profitability and Growth
FedEx has consistently demonstrated profitability over the past decade, with a 10-year track record of success. With an operating margin of 6.43%, it stands out in the Transportation industry. Moreover, the company's growth trajectory is promising, outperforming 61.67% of its industry counterparts in 3-year average revenue growth.
ROIC vs. WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) provides insight into a company's value creation capabilities. FedEx's ROIC of 5.98 is currently below its WACC of 8.1, suggesting challenges in generating cash flow relative to its invested capital.
Conclusion
In summary, FedEx (FDX, Financial) is estimated to be fairly valued. The company's fair financial condition and strong profitability, coupled with better-than-average industry growth, present a stable investment opportunity. For an in-depth look at FedEx's financials, investors can explore the 30-Year Financials here.
Discover High-Quality Investments
To uncover high-quality companies that may deliver above-average returns, consider the GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
