FedEx today
(As of 12/24/2024 at 05:19 PM ET)
- 52 week range
- $234.45
▼
$313.84
- Dividend yield
- 2.03%
- P/E ratio
- 16.77
- Price target
- $324.88
fedex New York Stock Exchange: FDX Shares rose after its fiscal 2025 second-quarter earnings report on its aggressive plan to unlock value. After careful review, the Board of Directors decided to separate the shipping business, which is struggling and offsetting its strength in core FedEx Express operations.
The plan is to do this tax efficiently, and the inventory distribution will likely 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 strong capital returns to investors.
FedEx Struggles in Q2: Guidance changed after share buybacks accelerate
FedEx’s results are mixed compared to consensus MarketBeat estimates but reveal the positive impact of its DRIVE initiative. The company reported net revenue of $22 billion, down nearly 1% from last year. This was weaker than expected but was offset by margin strength. Operating margin contracted by 100 basis points but less than expected, leaving adjusted earnings well above expectations. The revised rate of $4.05 is more than 1,000 basis points above consensus expectations for cost reductions that are expected to continue.
The results are partly mixed. The shipping sector contracted more than expected due to lower volume, which offset growth in the FedExpress business. FedEx Express package revenues grew significantly, as international demand offset domestic weakness.
FedEx MarketRank™ stock analysis
- Total MarketRank™
- 96th percentile
- Analyst evaluation
- Moderate purchase
- Upside/Downside
- 19.5% up
- Short interest level
- correct
- Earnings power
- moderate
- Environmental outcome
- -5.79
- News feelings
- 0.45
- Insider trading
- nothing
- project. Earnings growth
- 13.78%
See full analysis
The guidance is good, which is another reason why the stock price is rising. The company raised its revenue forecast while lowering its earnings target, leaving both the consensus target and prompting analysts to revise their estimates. FedEx expects revenue to be flat versus the prior year, up from an expected single-digit decline, with margin widening significantly. Earnings are expected to grow by approximately 10% due to cost savings and share buybacks.
Stock buybacks are part of the FedEx story, and they accelerated in the fiscal second quarter. The company repurchased $1 billion worth of shares, or about 3.7 million, which impacted the quarterly results by $0.07 per share. Buybacks reduced the number by 3.55% on a diluted weighted average basis and are expected to continue this year and next. The company plans to buy back another $0.50 billion this year, with $3.1 billion remaining on existing authorization for the next fiscal year.
The balance shows the impact of accelerated buybacks and restructurings, but the net result is positive for shareholders. Highlights include lower cash, current and long-term assets and total assets offset by lower liabilities. The value of shareholders’ equity decreased compared to last year by about 1.7%, but this was compensated for by an increase in treasury shares. The value of treasury stocks rose by $1.669 billion, more than the decline in stocks.
Analysts change their outlook on FedEx in the fourth quarter
Analyst activity in the Q4 2024 calendar is promising, and the upward shift is gaining momentum after the Q2 release. The first revision picked up by MarketBeat is an upgrade from Loop Capital that includes a significant increase in the price target. The upgrade is a Buy from Hold, and the target price was increased by $80, or more than 25%, to align with the premium range. The consensus target indicates that a move to retest the all-time high is coming; The high-end range adds about 25% to it.
Price action after the release is bullish. The market is up about 10% to match its recent highs. The market is expected to be high and likely to trend higher over the coming weeks and months, but there is a risk of volatility. Price action has been range-bound over the past few months and is below the crucial resistance target, the current all-time high. A move to retest this level could lead to profit taking. A move above that would be a bullish signal, potentially sending the market higher in 2025.
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