Rating Change #4
FedEx Corporation (FDX - Get Report) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- FDX's revenue growth has slightly outpaced the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 11.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FDX's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
- FEDEX CORP has improved earnings per share by 21.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FEDEX CORP increased its bottom line by earning $4.57 versus $3.77 in the prior year. This year, the market expects an improvement in earnings ($6.27 versus $4.57).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Air Freight & Logistics industry average. The net income increased by 22.1% when compared to the same quarter one year prior, going from $380.00 million to $464.00 million.
- Net operating cash flow has slightly increased to $860.00 million or 8.04% when compared to the same quarter last year. Despite an increase in cash flow of 8.04%, FEDEX CORP is still growing at a significantly lower rate than the industry average of 82.55%.
FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. It operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. The company has a P/E ratio of 17, equal to the average transportation industry P/E ratio and below the S&P 500 P/E ratio of 17.7. FedEx has a market cap of $26 billion and is part of the services sector and transportation industry. Shares are down 11.8% year to date as of the close of trading on Tuesday.You can view the full FedEx Ratings Report or get investment ideas from our investment research center.