FedEx Corporation Stock Buy Recommendation Reiterated (FDX)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- FedEx Corporation (NYSE: FDX) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. 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, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although FDX's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. To add to this, FDX has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $1,258.00 million or 48.17% when compared to the same quarter last year. In addition, FEDEX CORP has also vastly surpassed the industry average cash flow growth rate of -72.59%.
  • In its most recent trading session, FDX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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. FedEx has a market cap of $30.5 billion and is part of the services sector and transportation industry. The company has a P/E ratio of 17.00, below the S&P 500 P/E ratio of 18.00. Shares are up 8.5% 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.

--Written by a member of TheStreet Ratings Staff.

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