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FedEx Corp - Stock Quote FDX

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FedEx's Fiscal Third-Quarter Ground Margin Falls Slightly Short, but Improvement Still Likely

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

FedEx reported mixed fiscal third-quarter (ended February) results, in our view. Consolidated revenue (up 10%) came in slightly short of our expectations as the omicron variant pressured ground and express package volumes (by tempering customer demand), while ground's margin (although up sequentially) fell short of our expected run rate. On the positive side, overall pricing gains were once again solid, Express' EBIT margin was mostly in line, and Freight's LTL operations continued to outperform. Additionally, management reiterated fiscal 2022 adjusted EPS guidance of $20.50-$21.50. Our $258 DCF-derived fair value estimate may come down slightly as we tweak our near-term ground margin assumptions modestly lower, but we don't expect to drastically alter our midcycle model forecasts.

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FedEx Corp's Company Profile

Business Description

FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2020 (ended May 2020), FedEx derived 51% of revenue from its express division, 33% from ground, and 10% from freight, its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth- largest global parcel delivery provider.

942 South Shady Grove Road
Memphis, TN, 38120
T +1 901 818-7500
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Feb 28, 2022
Fiscal Year End May 31, 2021
Stock Type Cyclical
Employees 564,000

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