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FedEx (FDX) Sets Targets for Fiscal 2025, Stock Down 2.6%
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Shares of FedEx Corporation (FDX - Free Report) declined 2.6% on Jul 29 as its targets for fiscal 2025 (ending May 31, 2025), elaborated at the investors’ meeting, failed to find favor with investors. Shares of FedEx have declined 9.6% so far this year due to supply-chain woes and the resultant high costs.
Image Source: Zacks Investment Research
Given this backdrop of uninspiring performance, let’s delve into the details of the fiscal 2025 financial targets, laid down by the currently Zacks Rank #3 (Hold) FDX, at the investors’ meeting, held after many years..
FedEx, which focuses on rewarding its shareholders through dividends and buybacks, expects to have a dividend payout ratio (adjusted) of at least 25% in fiscal 2025. The ratio of capital expenditures to revenues is expected to be less than or equal to 6.5%. FDX is aiming at an annual total shareholder return of 18-25% through fiscal 2025.
Operating income (adjusted) for fiscal 2025 is anticipated to be $3-$4.5 billion more than fiscal 2022 actuals. The adjusted operating income for the Express, Ground and Freight segments is anticipated in the 8-9%, 11-12% and 20-22% bands, respectively, for fiscal 2025. Compound annual revenue growth through fiscal 2025 is expected in the 4-6% band.Moreover, management at FDX anticipates the CAGR for adjusted earnings per share between 14% and 19% through fiscal 2025.
Despite outlining plans to boost earnings and shareholder returns under the new CEO Raj Subramaniam, who took charge on Jun 1, 2022, FDX witnessed share price depreciation, mainly due to the disappointing guidance for adjusted operating margins of its key ground unit, which handles e-commerce deliveries for many retailers. Adjusted operating margin for the unit is expected in the 11-12% range for fiscal 2025, which does not signal any improvement from the pre-pandemic actuals. The readings were 13.9% and 13% in fiscal 2018 and 2019, respectively. The sluggish forecast highlights the challenges posed by escalating fuel and other input costs as inflation remains sky-high.
Stocks to Consider
Some better-ranked stocks within the broader Transportation sector that investors can consider are as follows:
Eagle Bulk Shipping sports a Zacks Rank #1 , presently. EGLE has a pleasant surprise history, with his earnings having outperformed the Zacks Consensus Estimate in two of the preceding four quarters while missing the mark in the other two.
Shares of Eagle Bulk have gained more than 14% in the year-to-date period. Improved market sentiments surrounding the Drybulk market are aiding the stock. EGLE owns one of the largest fleets of Supramax/Ultramax ships, globally. Efforts to upgrade its fleet also bode well.
Capital Product Partners (CPLP - Free Report) presently flaunts a Zacks Rank of 1. CPLP has an impressive surprise history, with its bottom line having outperformed the Zacks Consensus Estimate in three of the preceding four quarters while missing the mark in one.
Shares of Capital Product Partners have rallied more than 24% in a year. Improved market sentiments surrounding the Drybulk market are aiding the CPLP stock.
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FedEx (FDX) Sets Targets for Fiscal 2025, Stock Down 2.6%
Shares of FedEx Corporation (FDX - Free Report) declined 2.6% on Jul 29 as its targets for fiscal 2025 (ending May 31, 2025), elaborated at the investors’ meeting, failed to find favor with investors. Shares of FedEx have declined 9.6% so far this year due to supply-chain woes and the resultant high costs.
Image Source: Zacks Investment Research
Given this backdrop of uninspiring performance, let’s delve into the details of the fiscal 2025 financial targets, laid down by the currently Zacks Rank #3 (Hold) FDX, at the investors’ meeting, held after many years..
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FedEx, which focuses on rewarding its shareholders through dividends and buybacks, expects to have a dividend payout ratio (adjusted) of at least 25% in fiscal 2025. The ratio of capital expenditures to revenues is expected to be less than or equal to 6.5%. FDX is aiming at an annual total shareholder return of 18-25% through fiscal 2025.
Operating income (adjusted) for fiscal 2025 is anticipated to be $3-$4.5 billion more than fiscal 2022 actuals. The adjusted operating income for the Express, Ground and Freight segments is anticipated in the 8-9%, 11-12% and 20-22% bands, respectively, for fiscal 2025. Compound annual revenue growth through fiscal 2025 is expected in the 4-6% band.Moreover, management at FDX anticipates the CAGR for adjusted earnings per share between 14% and 19% through fiscal 2025.
Despite outlining plans to boost earnings and shareholder returns under the new CEO Raj Subramaniam, who took charge on Jun 1, 2022, FDX witnessed share price depreciation, mainly due to the disappointing guidance for adjusted operating margins of its key ground unit, which handles e-commerce deliveries for many retailers. Adjusted operating margin for the unit is expected in the 11-12% range for fiscal 2025, which does not signal any improvement from the pre-pandemic actuals. The readings were 13.9% and 13% in fiscal 2018 and 2019, respectively. The sluggish forecast highlights the challenges posed by escalating fuel and other input costs as inflation remains sky-high.
Stocks to Consider
Some better-ranked stocks within the broader Transportation sector that investors can consider are as follows:
Eagle Bulk Shipping sports a Zacks Rank #1 , presently. EGLE has a pleasant surprise history, with his earnings having outperformed the Zacks Consensus Estimate in two of the preceding four quarters while missing the mark in the other two.
Shares of Eagle Bulk have gained more than 14% in the year-to-date period. Improved market sentiments surrounding the Drybulk market are aiding the stock. EGLE owns one of the largest fleets of Supramax/Ultramax ships, globally. Efforts to upgrade its fleet also bode well.
Capital Product Partners (CPLP - Free Report) presently flaunts a Zacks Rank of 1. CPLP has an impressive surprise history, with its bottom line having outperformed the Zacks Consensus Estimate in three of the preceding four quarters while missing the mark in one.
Shares of Capital Product Partners have rallied more than 24% in a year. Improved market sentiments surrounding the Drybulk market are aiding the CPLP stock.