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Investors Should Bet on FedEx (FDX) Stock Now: Here's Why
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FedEx Corporation (FDX - Free Report) is a stock that investors may consider adding to their portfolio as it benefits from upbeat e-commerce demand despite supply-chain woes and the resultant northward movement of costs.
Against this backdrop, let’s look at the factors that make this currently Zacks Rank #2 (Buy) stock an attractive pick.
An Outperformer: Shares of FedEx have gained 3.5% over the past three months against its industry’s decline of 16.7%.
Image Source: Zacks Investment Research
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter earnings has been revised 1.6% upward over the past 60 days. For fiscal 2022, the consensus mark for earnings has moved 0.44% north in the same time frame. The favorable estimate revisions indicate the confidence of brokers in the stock.
Given the wealth of information at brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the path of estimate revisions serves as an important pointer when it comes to ascertaining a stock price.
Moreover, FedEx’s Momentum Style Score of B highlights its short-term attractiveness.
Upbeat Demand Scenario & Favorable Pricing:The penchant for online shopping remains strong even with economies reopening and people going out for work. The e-commerce demand strength bodes well for FDX’s ground unit, which handles e-commerce deliveries for many retailers.
Revenues at the ground unit are likely to have been strong owing to upbeat e-commerce demand in the fourth quarter of fiscal 2022. Detailed results will be out on Jun 23, 2022.
Favorable pricing should also have bolstered the top-line performance in the soon-to-be-reported quarter. The Zacks Consensus Estimate for total revenues in the fiscal fourth quarter currently indicates 7.61% growth from the fourth-quarter fiscal 2021’s reported number.
Dividend Hike Affirms Financial Strength: In June 2022, FedEx raised its dividend by 53% to $1.15 per share (annually: $4.60). The dividend is payable Jul 11, of record as of Jun 27. The move underscores the company’s sound financial health as it utilizes free cash flow for enhancing shareholders’ returns.
FedEx's liquidity position is solid. FDX’s the company's current ratio, a measure of liquidity, was pegged at 1.39 at the end of the third quarter of fiscal 2022. A current ratio of more than 1 indicates that the company's assets will be able to cover its debts that are due at the end of the year. Moreover, FDX exited the third quarter of fiscal 2022 with cash and equivalents of $6,065 million, much higher than its current debt of $116 million.
Bullish Industry Rank: The industry to which FedEx belongs currently has a Zacks Industry Rank of 73 (of 250 plus groups). Such a solid rank places companies in the top 29% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently carries a Zacks Rank #2 (Buy).
The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%.Improving freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently carries a Zacks Rank #2.
GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a huge positive for GATX.
Driven by the upsides, the stock has risen 1.4% in the past year. GATX currently has a Zacks Rank of 2.
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Investors Should Bet on FedEx (FDX) Stock Now: Here's Why
FedEx Corporation (FDX - Free Report) is a stock that investors may consider adding to their portfolio as it benefits from upbeat e-commerce demand despite supply-chain woes and the resultant northward movement of costs.
Against this backdrop, let’s look at the factors that make this currently Zacks Rank #2 (Buy) stock an attractive pick.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
An Outperformer: Shares of FedEx have gained 3.5% over the past three months against its industry’s decline of 16.7%.
Image Source: Zacks Investment Research
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter earnings has been revised 1.6% upward over the past 60 days. For fiscal 2022, the consensus mark for earnings has moved 0.44% north in the same time frame. The favorable estimate revisions indicate the confidence of brokers in the stock.
Given the wealth of information at brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the path of estimate revisions serves as an important pointer when it comes to ascertaining a stock price.
Moreover, FedEx’s Momentum Style Score of B highlights its short-term attractiveness.
Upbeat Demand Scenario & Favorable Pricing:The penchant for online shopping remains strong even with economies reopening and people going out for work. The e-commerce demand strength bodes well for FDX’s ground unit, which handles e-commerce deliveries for many retailers.
Revenues at the ground unit are likely to have been strong owing to upbeat e-commerce demand in the fourth quarter of fiscal 2022. Detailed results will be out on Jun 23, 2022.
Favorable pricing should also have bolstered the top-line performance in the soon-to-be-reported quarter. The Zacks Consensus Estimate for total revenues in the fiscal fourth quarter currently indicates 7.61% growth from the fourth-quarter fiscal 2021’s reported number.
Dividend Hike Affirms Financial Strength: In June 2022, FedEx raised its dividend by 53% to $1.15 per share (annually: $4.60). The dividend is payable Jul 11, of record as of Jun 27. The move underscores the company’s sound financial health as it utilizes free cash flow for enhancing shareholders’ returns.
FedEx's liquidity position is solid. FDX’s the company's current ratio, a measure of liquidity, was pegged at 1.39 at the end of the third quarter of fiscal 2022. A current ratio of more than 1 indicates that the company's assets will be able to cover its debts that are due at the end of the year. Moreover, FDX exited the third quarter of fiscal 2022 with cash and equivalents of $6,065 million, much higher than its current debt of $116 million.
Bullish Industry Rank: The industry to which FedEx belongs currently has a Zacks Industry Rank of 73 (of 250 plus groups). Such a solid rank places companies in the top 29% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Other Stocks to Consider
Investors interested in the Zacks Transportation sector can also consider stocks like Ryder System (R - Free Report) , C.H. Robinson Worldwide (CHRW - Free Report) and GATX Corp. (GATX - Free Report) .
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently carries a Zacks Rank #2 (Buy).
The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%.Improving freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently carries a Zacks Rank #2.
GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a huge positive for GATX.
Driven by the upsides, the stock has risen 1.4% in the past year. GATX currently has a Zacks Rank of 2.