The stock is down -1.10% to $137.02 in pre-market trade
The firm said that while "shares are up nearly 50% in the last 12 months driven by a flurry of excitement surrounding the company's profit improvement plan, a historical share buyback and high profile shareholder turnover, underlying the hype remains a company delivering stagnant profitability and constant discussion of future improvement. "
"With a culture and incentive structure aligned to drive near-term growth at the expense of capital returns, we believe...a transformation at FedEx will take much longer to achieve than we initially hoped," the note said.
Separately, heStreet Ratings team rates FEDEX CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate FEDEX CORP (FDX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that FDX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.64 is high and demonstrates strong liquidity.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 48.08% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- FEDEX CORP has improved earnings per share by 8.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FEDEX CORP reported lower earnings of $4.92 versus $6.41 in the prior year. This year, the market expects an improvement in earnings ($6.68 versus $4.92).
- The net income growth from the same quarter one year ago has exceeded that of the Air Freight & Logistics industry average, but is less than that of the S&P 500. The net income increased by 4.7% when compared to the same quarter one year prior, going from $361.00 million to $378.00 million.
- You can view the full analysis from the report here: FDX Ratings Report