We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Memphis-based Zacks Rank #1 (Strong Buy) FedEx Corporation ((FDX - Free Report) ) is the leader global express delivery services. Since 1971, it has been providing a transportation, e-commerce, and business services for its customers. Three main segments drive FedEx: FedEx Express, FedEx Ground, and FedEx Freight.
FedEx Express: Offers time definite delivery to more than 220 countries and territories.
FedEx Ground: A low-cost, day-certain service to any business address in the United States and Canada.
FedEx Freight: Offers less-than-truckload (LTL) freight services in the United States
A Straightforward Bull Case
The meteoric rise of e-commerce in the United States and worldwide presents significant opportunities for freight companies to grow and expand their business. Beyond traditional delivery, e-commerce consumers demand more efficient and innovative delivery solutions, producing more potential revenue.
Image Source: Zacks Investment Research
Industry Tailwinds
Zack’s in-house studies have shown that the top 50% of industry groups tend to outperform the bottom 50% by a factor of two to one. The Transportation – Air Freight and Cargo group meets the threshold by a long shot. The group is ranked in the top 9% of all industries tracked by Zacks and has drastically outperformed the S&P 500 Index over the past three years.
Image Source: Zacks Investment Research
Fundamentals
Despite a recent earnings slowdown, FDX has delivered positive surprises on earnings for two quarters running. Though earnings growth slowed last quarter, investors must look to the future. Analysts have earnings per share soaring to new highs within the next two years.
Image Source: Zacks Investment Research
The Total Package
Beyond strong industry tailwinds and a larger total addressable market, FedEx management is intent on rewarding shareholders through dividend payouts. In April, FDX raised its dividend by 10% to $1.26 per share or $5.05 annually. The company also raised its full-year outlook based on its cost savings plan, saying, “We are pleased with the company’s efforts to reward its shareholders even in these difficult times.”
Technical View
One of the most impressive traits of FedEx is its stable yet robust technical performance. FDX has a beta of 1.01, meaning it’s a very tame stock, and its volatility is in line with that of the S&P 500. Despite the low beta, year-to-date, the stock has returned 30% versus 6% in the S&P. Furthermore, the share price is pulling back to the 50-day moving average – an area the stock has found support at for months.
Image Source: Zacks Investment Research
Takeaway
Overall, the rise of e-commerce presents significant opportunities for freight companies like FDX to improve their profitability, increase their market share, and enhance their competitiveness. Furthermore, FDX’s drive to reward shareholders through dividends and cost savings should drive the stock higher in 2023.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bull of the Day: FedEx (FDX)
Company Overview
Memphis-based Zacks Rank #1 (Strong Buy) FedEx Corporation ((FDX - Free Report) ) is the leader global express delivery services. Since 1971, it has been providing a transportation, e-commerce, and business services for its customers. Three main segments drive FedEx: FedEx Express, FedEx Ground, and FedEx Freight.
FedEx Express: Offers time definite delivery to more than 220 countries and territories.
FedEx Ground: A low-cost, day-certain service to any business address in the United States and Canada.
FedEx Freight: Offers less-than-truckload (LTL) freight services in the United States
A Straightforward Bull Case
The meteoric rise of e-commerce in the United States and worldwide presents significant opportunities for freight companies to grow and expand their business. Beyond traditional delivery, e-commerce consumers demand more efficient and innovative delivery solutions, producing more potential revenue.
Image Source: Zacks Investment Research
Industry Tailwinds
Zack’s in-house studies have shown that the top 50% of industry groups tend to outperform the bottom 50% by a factor of two to one. The Transportation – Air Freight and Cargo group meets the threshold by a long shot. The group is ranked in the top 9% of all industries tracked by Zacks and has drastically outperformed the S&P 500 Index over the past three years.
Image Source: Zacks Investment Research
Fundamentals
Despite a recent earnings slowdown, FDX has delivered positive surprises on earnings for two quarters running. Though earnings growth slowed last quarter, investors must look to the future. Analysts have earnings per share soaring to new highs within the next two years.
Image Source: Zacks Investment Research
The Total Package
Beyond strong industry tailwinds and a larger total addressable market, FedEx management is intent on rewarding shareholders through dividend payouts. In April, FDX raised its dividend by 10% to $1.26 per share or $5.05 annually. The company also raised its full-year outlook based on its cost savings plan, saying, “We are pleased with the company’s efforts to reward its shareholders even in these difficult times.”
Technical View
One of the most impressive traits of FedEx is its stable yet robust technical performance. FDX has a beta of 1.01, meaning it’s a very tame stock, and its volatility is in line with that of the S&P 500. Despite the low beta, year-to-date, the stock has returned 30% versus 6% in the S&P. Furthermore, the share price is pulling back to the 50-day moving average – an area the stock has found support at for months.
Image Source: Zacks Investment Research
Takeaway
Overall, the rise of e-commerce presents significant opportunities for freight companies like FDX to improve their profitability, increase their market share, and enhance their competitiveness. Furthermore, FDX’s drive to reward shareholders through dividends and cost savings should drive the stock higher in 2023.