"We are adding FedEx to our US1 List. The shares are a top pick as we enter 2015," analysts said.
"We believe the company will capitalize on its profit improvement plan, that it benefits from declining fuel prices through rising demand and a lag benefit in its fuel surcharge in F2Q15, and that e-commerce volumes will drive demand for its services," analysts added.
Additionally, FedEx Express overnight shipments posted 3.8% growth in F2Q15, its highest growth rate in eight years, indicating the ongoing fuel pullback could show some rebound in its core Express operations, analysts noted.
Shares of FedEx are up 0.73% to $179 in pre-market trading.
Separately, TheStreet 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, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FDX's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, FDX has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
- Powered by its strong earnings growth of 37.25% and other important driving factors, this stock has surged by 27.04% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FDX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- FEDEX CORP has improved earnings per share by 37.3% 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 $6.79 versus $4.92 in the prior year. This year, the market expects an improvement in earnings ($9.00 versus $6.79).
- 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 23.9% when compared to the same quarter one year prior, going from $489.00 million to $606.00 million.
- You can view the full analysis from the report here: FDX Ratings Report