FDX
Fedex Corp
Industrial/Transportation
06/19/2019
Presented
| Date | 06/14/2019 |
| Price | $164.55 |
| Market Cap | $42.88B |
| Ent Value | $63.15B |
| P/E Ratio | 12.13x |
| Book Value | $76.35 |
| Div Yield | 1.58% |
| Shares O/S | 260.58M |
| Ave Daily Vol | 2,089,476 |
| Short Int | 2.15% |
Current
| Price | $265.92 |
| Market Cap | $64.97B |
| FedEx Corp. engages in the provision of a portfolio of transportation, e-commerce, and business services. It operates through the following segments: FedEx Express, TNT Express, FedEx Ground, FedEx Freight, FedEx Services, and Other. The FedEx Express segment consists of domestic and international shipping services for delivery of packages, and freight. The TNT Express segment comprises of international express transportation, small-packaging ground delivery, and freight transportation. The FedEx Ground segment focuses on small-package ground delivery services, and day-certain service to any business address in the United States, and Canada. The FedEx Freight segment offers less-than-truckload freight services across all lengths of haul. The FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services, and certain back-office functions. The company was founded by Frederick Wallace Smith on June 18, 1971 and is headquartered in Memphis, TN. |
Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), FedEx Corp (FDX), Target Corporation (TGT), Uber Technologies Inc (UBER), Walmart Inc (WMT).
Highlights
The presenter is short shares of FedEx (FDX) and sees the potential for the stock to decline over the next 12 - 24 months due to competition and an inability to reach $20/share of earnings power, as bulls hope. With the stock at ~$165, the Street (and investors), continue to value shares at ~10x EPS. Historically, FDX has been viewed as “cheap” at around current levels given a transformation story (TNT) and an ability to generate FCF once capex is scaled back; however, the presenter believes FDX faces multiple headwinds that could lead to a de-rating of the stock, namely: i) a complex integration of TNT Express, ii) no FCF due to an inability to scale back capex over time, and iii) increasing competition in the logistics business, including massive disruption from new technology/e-commerce logistics solutions. The consensus EPS estimates for this year - note, May 31 FY-end - and next are ~$15.30 and ~$16.30, respectively, putting the stock at ~10x P/E. If the headwinds do impact earnings, FDX’s EPS could fall well short of $15. And, if the narrative changes and investors start to value FDX on a multiple to FCF, which may be more appropriate, shares will fall.
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