FDX - Embedded Expectations Analysis - 2021 08 03
FedEx Corporation (FDX:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.4x Uniform P/E (Fwd V/E′). At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about future pricing dynamics, operating margin growth, and network enhancements.Specifically, management may lack confidence in their ability to sustain Ground and Freight operating margin improvements, further reduce their financial leverage, and manage total integration spending. Furthermore, they may be concerned about the progress of expansion project implementation for Ground infrastructure, their alignment of prices with cost, and the renegotiation process of enterprise customer contracts. Moreover, management may also lack confidence in their ability to enhance their air network, continue innovating and differentiating their Ground capabilities, and yield short and long-term benefits from energy-efficient equipment and vehicle replacement projects. In addition, management may lack confidence in their ability to leverage the strength of their global networks and deliver a successful peak season through additional flexibility and creativity.
FedEx provides transportation, e-commerce and business services through companies under the FedEx brand. These companies are included in the following segments: Federal Express Corporation, including TNT Express B.V., is an express transportation company; FedEx Ground Package System, Inc., which is a provider of small-package ground delivery services; FedEx Freight Corporation, which is a provider of less-than-truckload freight services; and FedEx Corporate Services, Inc., which provides sales, marketing, information technology, communications, customer service, technical support, billing and collections services, and certain back-office functions.
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