FDX
Fedex Corp
Industrial/Transportation, Consumer
10/24/2016
Presented
| Date | 10/19/2016 |
| Price | $169.70 |
| Market Cap | $45.65B |
| Ent Value | $55.16B |
| P/E Ratio | 25.44x |
| Book Value | $53.21 |
| Div Yield | 0.01% |
| Shares O/S | 269.00M |
| Ave Daily Vol | 1,357,578 |
| Short Int | 1.54% |
Current
| Price | $265.92 |
| Market Cap | $64.97B |
| FedEx Corp. provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand. It operates through four segments: FedEx Express, FedEx Ground, FedEx Freight and FedEx Services. The FedEx Express segment offers time-certain delivery to more than 220 countries and territories. This segment also includes FedEx Trade Networks, Inc., which provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding; and FedEx SupplyChain Systems, Inc., which offers a range of supply chain solutions. The FedEx Ground segment includes FedEx Ground Package System, Inc., which provides small-package ground delivery services. This segment also includes FedEx SmartPost, Inc., which specializes in the consolidation and delivery of low-weight, less time-sensitive business-to-consumer packages using the U.S. Postal Service for final delivery. The FedEx Freight segment includes FedEx Freight, Inc., which provides less-than-truckload freight services across all lengths of haul, offering. This segment offers freight delivery service to most points in Canada, Mexico, Puerto Rico and the U.S. Virgin Islands and includes FedEx Custom Critical, Inc., which is a provider of time-specific, critical shipment services. The FedEx Services segment includes FedEx Corporate Services, Inc., which provides sales, marketing, information technology, communications and back-office support to other companies in the FedEx Group. This segment also includes FedEx TechConnect, Inc., which is responsible for customer service, billings and collections for its U.S. customers and offers technical support services; and FedEx Office & Print Services, Inc., which provides document and business services and retail access to its package transportation businesses. 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), Deutsche Post AG (DPW GR), FedEx Corporation (FDX), United Parcel Service Inc (UPS)
Highlights
The presenter is long shares of FedEx (FDX) and sees the potential for upside to $211 if the company can 1) successfully integrate TNT Express and achieve its synergy targets, and then 2) “follow the UPS playbook” and reduce capex, focus on improving margins and ROC, and increase the dividend payout. The risk/ reward appears to be favorable at ~$170 because FDX is taking price in concert with peers in the US and the stock is trading at the widest spread to UPS in recent history (P/E, P/CF, EV/EBITDA, etc.). It is among the cheapest stocks in the transportation industry at 14x 2016 estimated EPS (and 6.8x on an EV/ 2016 EBITDA basis), and in his opinion, the TNT integration might be founder and CEO Fred Smith’s last initiative at the company. At a reasonable 7x estimated 2018 EBITDA shares of FDX would be more fairly valued at $211, he added.
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