To The Moon

$FedEx(FDX)$ just released its Q4 FY2024 results, which exceeded market expectations and provided optimistic guidance, with "cost reduction and efficiency" as the key focus for this fiscal year, and increased guidance for FY2025 due to the recent rebound in the logistics business.

FDX stock jumped more than 14 percent after hours, approaching a new high.

FY2024 Q4 Results

• Revenue rose 0.9% year-over-year to $22.1 billion, beating market expectations of $22.06 billion.

• Earnings per share (EPS) of $5.41 beat estimates of $5.37, up 9.5% year-over-year

• Adjusted operating profit was $1.87 billion, higher than the $1.82 billion expected and the $1.77 billion reported in the same period last year;

The company has also raised its guidance for FY2025, the

• Revenue growth is expected to be in the low-single-digit to mid-single-digit range, above expectations of 0. This follows two consecutive years of declining revenues, with revenues falling about 3% year-over-year in fiscal 2024;

• Earnings per share expected to be in the range of $20.00-$21.50

Investment Highlights

FedEx's strong performance in the quarter was driven by the following factors.

• Ground segment performance improves due to cost reductions from DRIVE program, improved yields and increased commercial parcel volumes

• Improved operating results in the Freight division, thanks to improved yields and effective cost control

• Company Announces Permanent Closure of Seven Facilities to Optimize Operations

• The Express segment's performance declined, mainly due to the retirement of some aircraft and related engines, as a result of lower international yields.

Market Focus

1. DRIVE Program Progress and Future Expected Savings
   FedEx management is likely to emphasize that the DRIVE program is making significant progress. The company expects to realize $4 billion in permanent cost reductions by fiscal year 2025. Savings will be $1.2 billion on the ground network and $1.3 billion on the over-the-air and international networks.

2. Express Segment Performance and Improvement Plans
   Management may recognize that the Express segment has faced challenges, primarily due to declining international yields. Retirement of select aircraft and associated engines as part of modernization efforts. In addition, they may emphasize the positive impact of the DRIVE program on the division.

3. Market Demand and Pricing Environment:
   Management may note that the company achieved 0.9% revenue growth in the fourth quarter of fiscal 2024 despite challenges. They may discuss expectations for low-single-digit to mid-single-digit revenue growth in fiscal 2025, reflecting cautious optimism about market demand.

4. Capital Allocation Strategy:
   FedEx announced plans to repurchase $1.5 billion of its common stock, of which $1 billion will be completed in the next fiscal quarter. Management may further discuss the strategic considerations behind this decision.

5. Technology investments and innovation:
   While technology investments were not specifically mentioned in the search results, management may have emphasized the company's ongoing modernization efforts, such as aircraft upgrades in the Express division.

6. International Business Development:
   Management may discuss the challenges facing international business, particularly the decline in international yields in the Express division. They may outline strategies to address these challenges.

7. SDGs:
   While the SDGs are not directly mentioned in the search results, management may associate them with the company's modernization efforts and operational efficiency improvements.

Summary

The company's current valuation is relatively low, with a forward-looking P/E of about 12x, at the low end of its 5-year historical range, although revenue growth remains a concern. Investors may need to remain patient and wait for the long-term effects of the company's transformation initiatives to materialize.