NEW YORK ( TheStreet) -- FedEx Corporation (NYSE: FDX) has been downgraded by TheStreet Ratings from buy to hold. 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 and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • FDX's revenue growth has slightly outpaced the industry average of 7.1%. 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.
  • 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, FEDEX CORP's cash flow growth rate is still lower than the industry average growth rate of 31.87%.
  • The gross profit margin for FEDEX CORP is rather low; currently it is at 24.60%. Regardless of FDX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.40% trails the industry average.
  • FDX has underperformed the S&P 500 Index, declining 20.85% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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 14.4, 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 $22.1 billion and is part of the services sector and transportation industry. Shares are down 27.2% year to date as of the close of trading on Monday.

You can view the full FedEx Ratings Report or get investment ideas from our investment research center.
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