FedEx Corporation (NYSE: FDX)
FedEx Corporation is an American multinational conglomerate holding company focused on transportation, e-commerce and services. It is based in Memphis Tennessee and was founded in 1971. Having released a very appealing fourth-quarter fiscal report for 2022, FedEx has caught the eyes of many investors with an increase in mentions by 105% over the last day, prompting investors to wonder what makes it so hyped. FedEx shares are currently priced at $240.47.
There are plenty of reasons why it might be a good time to take a position in FedEx but here are some of the major ones.
FedEx recently pleased its investors by announcing a good fourth-quarter report for 2022. In addition, their fiscal year 2023 earnings guidance was higher than Wall Street had been expecting.
The company plans a stock repurchase of $1.5 billion planned for the first half of fiscal 2023. This repurchase pace would represent an increase from fiscal 2022 -- a year in which the company bought back $2.2 billion of its common stock
FedEx also announced that it was raising its quarterly cash dividend by 53% to $1.15 per share on its common stock. The stock sports a reasonable price-to-earnings ratio of about 11, and its forward dividend yield is now 2%
In its fiscal Q4, which ended May 31, the company's revenue increased 8% year over year to $24.4 billion with help from higher shipping rates and fuel surcharges. This result was essentially in line with the $24.56 billion Wall Street had projected.
FedEx Freight has also performed wonderfully. Its operating margin jumped 570 basis points (5.7 percentage points) to 21.8%. This improvement was driven by a 28% increase in average revenue per shipment.
The industry itself looks very promising with global e-commerce spending expected to grow from $4.9 trillion in 2021 to $7.4 trillion by 2025. Analysts are forecasting that the stock will deliver 12.4% annual earnings growth over the next five years.
Like any other company, FedEx is not perfect. Here are a couple of reasons why it might not be the best time to buy any FexEx shares.
Operations continue to be constrained by the effects of supply-chain disruptions, slower economic growth and a tight labour market. The upcoming recession might also take a fair toll on FedEx’s performance.
Although Mail delivery giant FedEx (FDX -0.43%) has dipped 11% thus far in 2022, the stock still isn’t cheap, trading at $240.47
Companies like FedEx also face new competition from the likes of Amazon for that business.
FedEx is widely recognized as a bellwether of economic activity and is rather friendly to investors in terms of dividends, especially with the change in internal management. However, it does stand the chance of performing below par due to certain external factors and rising costs. Regardless, FedEx is a business that’s here to stay and grow come what may. With (mostly) better than expected revenues and an impressive dividend, it’s far from the worst time to purchase FedEx stock. If you’d like to receive more trending stocks direct to your inbox, check out our premium plans, or to learn more about the services offered by HypeIndex, head over to our FAQ page.
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