Summary \/ conclusion: <\/strong><\/em>Like the earnings preview title, which was right on target, I still think FedEx is too cheap but give it some time to consolidate the 15% jump in the stock price yesterday.<\/p>\nRaj Subramaniam’s is still sticking to the 10% operating margin target, but I suspect FedEx will eventually do better than that. Even if Freight is spunoff with it’s 15% – 20% operating margin, (much higher than Ground’s 11% – 12% and Express’s 4% – 5%), the economic logic or the financial logic here is that Freight’s capital-intensity will be jettisoned too.<\/p>\n
The expected revenue growth over the next 3 years has returned to positive growth, versus negative y-o-y declines.<\/p>\n
As the performance chart on the earnings preview demonstrated, FedEx’s stock price performance has lagged the SP 500 for 5 and 10 year time periods, but the stock has always delivered. Raj Subramaniam, and the FedEx management team have obviously been “greenlit” by the Board and probably Fred Smith too (now Executive Chairman) to take measures to improve returns-on-capital and drive shareholder value (i.e. get the stock price moving) after the fundamentals of the Express business have changed over the years.<\/p>\n
Look for slightly higher revenue growth ( a mild recession shouldn’t impact FedEx too greatly at this point), higher EPS on continued margin gains, higher free-cash-flow on lower capex and capital intensity, more capital returned to shareholders in the form of dividends and buybacks, and a more focused and leaner FedEx going forward.<\/p>\n
A leaner and more profitable FedEx should result from the changes over the next year or so. I hope FedEx management finds other areas to improve the transport giant.<\/p>\n
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FedEx (FDX) reported their fiscal Q4 ’24 earnings results Tuesday night, June 25th, 2024 after the closing bell, and the…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10],"tags":[],"class_list":["post-16219","post","type-post","status-publish","format-standard","hentry","category-fdx"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/16219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16219"}],"version-history":[{"count":10,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/16219\/revisions"}],"predecessor-version":[{"id":16239,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/16219\/revisions\/16239"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16219"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16219"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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