FedEx today
(As of 5:19 p.m. ET)
- 52 week range
- $234.45
▼
$313.84
- Dividend yield
- 2.03%
- P/E ratio
- 16.77
- Target price
- $324.88
FedEx New York Stock Exchange: FDX The company’s shares rose following its fiscal 2025 second-quarter earnings report on a bold plan to increase value. After careful consideration, the board of directors decided to spin off the struggling cargo business to offset the strength of FedEx Express’ core operations.
The plan is to do this in a tax efficient manner; the share distribution is likely to be completed within the next 18 months. The remaining business, which will grow in 2024, is expected to continue to grow while improving operating performance, increasing cash flow and delivering stable returns on capital to investors.
FedEx struggles in second quarter, changes leadership after accelerating share buybacks
FedEx’s results are mixed compared to the MarketBeat consensus estimate, but demonstrate the positive impact of the DRIVE initiative. The company reported net revenue of $22 billion, down nearly 1% from last year. This was weaker than expected but offset by margin strength. Operating margin contracted 100 basis points, but less than expected, resulting in adjusted earnings well above forecasts. Adjusted $4.05 by more than 1,000 bps. exceeding consensus estimates for cost cuts, which are expected to continue.
Results are mixed across segments. The cargo segment contracted more than expected due to lower volumes, which more than offset growth in FedExpress’s business. FedEx Express parcel revenue rose in both revenue and profit, with international demand offsetting domestic weakness.
FedEx MarketRank™ Stock Analysis
- Overall MarketRank™
- 96th percentile
- Analyst rating
- Moderate purchase
- Pros/Cons
- Growth potential 19.5%
- Short interest level
- Healthy
- Dividend Power
- Moderate
- Environmental assessment
- -5.79
- Mood News
- 0.45
- Insider trading
- N/A
- Project Profit Growth
- 13.78%
See full analysis
The forecast is good, and this is another reason why the share price is soaring. The company raised its revenue forecast while lowering its earnings target, which both beat the consensus target and caused leading analysts to revise their estimates. FedEx forecast revenue will remain flat year-over-year, compared with expectations for a low-single-digit decline, while margins will expand significantly. Earnings are expected to rise nearly 10% on cost savings and share buybacks.
Share buybacks are part of the FedEx story, and they accelerated in the second quarter. The company repurchased $1 billion (about 3.7 million) of shares, impacting quarterly results by $0.07 per share. Buybacks reduced the figure by 3.55% on a weighted average basis and are expected to continue this year and next. The company plans to repurchase another $0.50 billion this year, with $3.1 billion remaining under its current authorization for the next fiscal year.
The balance sheet shows the impact of accelerated buyouts and restructuring, but the net result is positive for shareholders. Highlights include decreases in cash, current, long-term and total assets offset by decreases in liabilities. Shareholders’ equity was down about 1.7% year-over-year, but that was more than offset by an increase in treasury shares. The value of treasury shares increased by $1.669 billion, more than the decrease in equity capital.
Analysts switched to FedEx in the fourth quarter
Analyst activity for the fourth quarter of 2024 is promising, with the bullish shift gaining momentum following the release of Q2 data. The first revision accepted by MarketBeat is an update to Loop Capital that includes a significant increase in the price target. The update is a buy instead of a hold, and the price target was raised by $80, or more than 25%, to be in line with the high-end range. The consensus target implies that a retest of the all-time high is approaching; the elite range adds about 25% to it.
The price action after the publication is bullish. The market is up about 10%, reaching recent highs. The market is expected to be higher and likely to trend higher in the coming weeks and months, but there is a risk of volatility. Over the past few months, price action has been range-bound and below the critical resistance target, the current all-time high. Repeated testing of this level may trigger profit taking; a move above it will be a bullish signal that will likely lead the market higher in 2025.
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