a. HORIZON: 3 months
b. FROM 18-06-2024 | UNTILL 17-09-2024
c. MANAGEMENT ASSESSMENT: 16.98% growth
d. RECOMMENDATION: BUY
Buy FedEx (FDX) shares from the $254.45 level with a target of $297.67 for 3 months.
a. FedEx is actively reducing costs. It plans to cut up to 2,000 jobs in Europe as part of a broader effort to address a slowdown in shipping demand. These cost-cutting measures include closing stations and offices, restructuring its ground and express operations, and reducing its global payroll. By cutting billions in operating expenses, FedEx aims to maintain profitability and adapt to market challenges.
b. On the 10th of June, FedEx announced a 9.5% increase in its quarterly dividend, raising it to $1.38 per share from $1.26. This new payout comes to $5.52 annually. The board of directors approved this increase as part of FedEx's disciplined capital allocation strategy, which also includes share repurchase programmes and strategic investments in the business. This dividend boost reflects FedEx's commitment to returning value to shareholders.
a. Forward P/E ratio – 13.85x
b. Dividend yield – 2.05%
c. The company’s balance sheet metrics are strong:
i. FDX has total assets of $86.11B and total equity of $26.37B
ii. It has $5.64B cash on hand
iii. It has a current ratio of 1.3
1 Year EPS: $5.35
a. Global Economic Uncertainty: With the global economy facing uncertainty, including potential recessions in major markets, FedEx's business could be negatively impacted, affecting stock performance.
b. Operational Restructuring: The company is undergoing a major restructuring of its operations and closing certain stations and offices. These changes may disrupt operations and incur additional costs before any benefits are realised.
c. Shipping Slowdown: The persistent slowdown in shipping demand is weighing on FedEx and the broader industry. Reduced shipping volumes could lead to lower revenues and profitability in the near term.
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