To The Moon

Earnings Calendar (17 Mar 2025)

from FACTSET

I am interested in the earnings of FactSet, TME, Jabil, Accenture, Nike, Micron and FedEx.

Let us look at FedEx, which is one of the leading couriers in the world.

Description of FedEx

Supply Chain companies’ outlook can be used to forecast the market.

summary

The Technical Analysis has a “Strong Sell” rating. The Analysts Sentiment has a “Buy” rating. The price target is $313.85, which implies a potential upside of 29.58%.

The stock price has fallen 2.4% from a year ago.

10 years summary

Observations of FedEx’s recent performance

Revenue

• Growth Trend: FedEx's revenue has shown a general upward trend over the decade, growing from $47.453 billion in 2015 to a peak of $87.693 billion in 2024. The compound annual growth rate (CAGR) over 10 years is 6.8%.

• Volatility: Revenue growth has been inconsistent, with notable declines in 2020 (-0.7%) due to the pandemic and further drops in 2023 (-3.9%) and 2024 (-2.7%). These drops reflect challenges in the logistics sector amid economic fluctuations.

• Competitive Advantage: The steady long-term revenue growth suggests a strong market position in the global logistics and delivery industry, likely driven by its extensive network and diversified services (e.g., FedEx Express, Ground, and Freight).

Operating Profit

• Growth Trend: Operating profit increased from $2.143 billion in 2015 to $6.298 billion in 2024, with significant growth in the early years (e.g., 78.4% in 2016 and 70.0% in 2017). However, growth has been uneven, with declines in 2020 ($2.852 billion) and 2021 ($5.973 billion) before recovering.

• Operating Margin: The operating margin improved from 4.5% in 2015 to 7.2% in 2024, indicating better cost management and operational efficiency over time.

• Competitive Advantage: The ability to maintain and grow operating margins amidst revenue volatility highlights FedEx's operational resilience and scalability, a key strength in the competitive shipping industry.

Earnings Per Share (EPS)

• Growth Trend: EPS rose from $3.65 in 2015 to $17.21 in 2024, with a remarkable 10-year CAGR of 18.7%. Notable jumps include 141.4% in 2020 and 296.9% in 2021, though there were setbacks (e.g., -87.9% in 2019 and -26.3% in 2022).

• Volatility: EPS growth has been highly volatile, reflecting sensitivity to economic cycles and one-time events, but the long-term upward trajectory is impressive.

• Competitive Advantage: The strong EPS growth suggests effective capital allocation and profitability, enhancing shareholder value and signaling financial health.

Dividends

• Growth Trend: Dividends per share increased from $0.80 in 2015 to $5.04 in 2024, with a 10-year CAGR of 15.7%. The dividend growth rate peaked at 60.0% in 2017 but slowed in later years (e.g., 9.6% in 2024).

• Consistency: FedEx has consistently raised dividends, even during challenging years, demonstrating a commitment to returning value to shareholders.

• Competitive Advantage: A robust and growing dividend policy reflects financial stability and confidence in future cash flows, a hallmark of a mature, competitive business.

Price-to-Earnings (P/E) Ratio

• Valuation: FedEx's P/E ratio is 14.9, which is moderate compared to industry standards. This suggests that it is reasonably valued relative to its earnings.

• 10-Year Median Returns: The 10-year median return on assets (ROA) is 4.6%, return on equity (ROE) is 15.6%, and return on invested capital (ROIC) is 6.7%, indicating solid but not exceptional returns.

• Competitive Advantage: The P/E ratio, combined with decent ROA and ROE, suggests a stable investment with potential for value creation, supported by its established market presence.

Free Cash Flow (FCF)

• Growth Trend: The EV/FCF ratio is 27.4, implying that free cash flow generation is robust relative to enterprise value. The 10-year CAGR for FCF is 15.7%, reflecting strong cash flow growth.

• Capital Structure: The median debt/equity ratio is 3.2, and debt/assets is 0.4, indicating a manageable leverage position.

• Competitive Advantage: Strong FCF growth and a balanced capital structure enable FedEx to invest in infrastructure, pursue acquisitions, and return capital to shareholders, reinforcing its competitive edge in logistics.

Other Key Metrics

• Gross Profit and Margin: Gross profit grew from $8.558 billion in 2015 to $18.952 billion in 2024, with the gross margin stabilizing around 21-22% in recent years, up from 18.0% in 2015. This reflects improved pricing power and cost control.

• Return on Invested Capital (ROIC): ROIC fluctuated between 1.5% (2019) and 13.6% (2018), settling at 6.9% in 2024. The 10-year median ROIC of 6.7% suggests efficient use of capital, though it has varied with economic conditions.

• Competitive Advantage: The consistent gross margin and ROIC improvements underscore FedEx's ability to maintain profitability and invest in its network, a critical advantage in a capital-intensive industry.

Overall Assessment

Over the past 10 years, FedEx has demonstrated resilience and growth despite economic headwinds, such as the 2020 pandemic. Its revenue and EPS growth (CAGR of 6.8% and 18.7%, respectively), coupled with a strong dividend policy (CAGR of 15.7%) and robust FCF generation, highlight its financial strength and competitive advantages. The company's ability to improve operating margins (from 4.5% to 7.2%) and maintain a stable valuation (P/E of 14.9) further supports its position as a leader in the logistics sector. Challenges include revenue volatility and occasional EPS declines, but FedEx's extensive global network, operational efficiency, and shareholder-friendly policies position it well for long-term success.

The EPS and Revenue forecast are $4.61 and $21.92B, respectively.

While FedEx demonstrates good resilience, I prefer to monitor the stock for now, given the current climate. The outlook of FedEx can be a good indicator of the global economic outlook.

@TigerStars

$FedEx(FDX)$

$Micron Technology(MU)$

$Nike(NKE)$