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Here's Why FedEx (FDX) Shares Have Gained 84.4% in a Year

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FedEx Corporation (FDX - Free Report) shares have surged 84.4% of value in the past year compared with the industry’s 74.8% increase.

FedEx's cash position is solid. Notably, FedEx exited the second quarter of fiscal 2021 with cash and cash equivalents of $8,339 million, way above the debt load (current portion) of $97 million. This indicates that the company has sufficient cash to meet current debt obligations.

We are also pleased with the company’s efforts to reward its shareholders even in these difficult times.  Notably, its dividends have witnessed a five-year CAGR of 26%. This reflects FedEx's shareholder-friendly approach. We are also positive on the acquisition of Cargex. The buyout has strengthened the company’s Latin American footprint.

The company's performance in the last reported quarter was aided by higher Ground revenues (up 38.2%) on residential delivery volume growth. Operating income (on an adjusted basis) soared more than 100% year over year to $1.51 billion in second-quarter fiscal 2021 due to pandemic-driven rise in demand for residential delivery services as well as higher demand for business-to-business delivery services.

Meanwhile, there has been a significant reduction in air cargo capacity due to the loss of commercial airline capacity. Moreover, though commercial volumes have been improving since May, it is below year-ago levels.

Favorable Estimate Revisions

The Zacks Consensus Estimate for current-year earnings has increased 18.6% to $3.25 per share in the past 90 days.

Zacks Rank & Other Stocks to Consider

FedEx currently carries a Zacks Rank #2 (Buy).

Investors interested in the broader Zacks Transportation sector can also consider stocks like Triton (TRTN - Free Report) , Kansas City Southern (KSU - Free Report) and Herc Holdings Inc. (HRI - Free Report) . Triton and Herc Holdings sport a Zacks Rank #1 (Strong Buy), while Kansas City Southern carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Triton, Kansas City and Herc Holdings is pegged at 10%, 15% and 31.2%, respectively.

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