FEDEX CORP (FDX) Stock Analysis
FEDEX CORP (FDX) Stock Analysis
Overall Grade: F (Concerning)
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FEDEX CORP faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 6.2% | Below expectations |
| FCF Margin | 4.8% | Cash flow pressure |
| Debt/Equity | 0.7x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is FEDEX CORP's Profitability and ROIC?
FEDEX CORP's return on invested capital of 6.2% is below the typical cost of capital.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.2% | Warning | Below cost of capital |
| Return on Equity (ROE) | 15.8% | Good | Efficient use of shareholder equity |
| Operating Margin | 6.3% | Adequate | Moderate operational efficiency |
How Strong is FEDEX CORP's Cash Flow Quality?
FEDEX CORP generated $4.3B in free cash flow over the trailing twelve months, representing a 4.8% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.9x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 4.8% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $4.3B | Good | Positive cash generation |
| OCF/Net Income | 1.9x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is FEDEX CORP's Financial Health?
FEDEX CORP's debt-to-equity ratio of 0.7x indicates moderate leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.7x | Adequate | Moderate leverage |
| Net Cash Position | $-13.7B | Warning | Net debt position |
Is FEDEX CORP Stock Overvalued or Undervalued?
FEDEX CORP trades at a P/E of 15.1x, representing a premium to the sector median of N/A. Free cash flow yield of 6.6% offers attractive cash returns.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 15.1x | Adequate | Reasonable valuation |
| EV/Sales | 0.9x | Excellent | Attractive revenue multiple |
| FCF Yield | 6.6% | Good | Attractive cash return |
| Dividend Yield | 2.1% | Adequate | Growth focus over income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.2% | Bottom 50% | 0.9x below |
| Free Cash Flow Margin | 4.8% | Top 50% | 1.1x above |
| Operating Margin | 6.3% | Top 50% | 1.0x at |
| Return on Equity (ROE) | 15.8% | Top 50% | 1.5x above |
| P/E Ratio | 15.1x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 6.2% (Warning - Bottom 50% of sector (median: 6.7%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 4.8% (Warning - Top 50% of sector (median: 4.3%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 72.1% (Adequate)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 15.1x (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 6.6% (Good)
Frequently Asked Questions
Q: What is FEDEX CORP's Return on Invested Capital (ROIC)?
FEDEX CORP (FDX) has a trailing twelve-month Return on Invested Capital (ROIC) of 6.2%. This compares below the sector median of 6.7%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is FEDEX CORP's Free Cash Flow Margin?
FEDEX CORP (FDX) has a free cash flow margin of 4.8%, generating $4.3 billion in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is FEDEX CORP stock overvalued or undervalued?
FEDEX CORP (FDX) trades at a P/E ratio of 15.1x, which is above the sector median of N/A. The EV/Sales multiple is 0.9x. Free cash flow yield is 6.6%, which represents an attractive cash return to investors.
Q: Does FEDEX CORP pay a dividend?
FEDEX CORP (FDX) currently pays a dividend yield of 2.1%. Including share buybacks, the total shareholder yield is 4.8%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does FEDEX CORP have?
FEDEX CORP (FDX) has a debt-to-equity ratio of 0.7x with total debt of $20.3 billion. Net debt position is $13.7 billion.
Q: What is FEDEX CORP's revenue and earnings growth?
FEDEX CORP (FDX) grew revenue by 3.1% year-over-year. Earnings per share increased by 15.5% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is FEDEX CORP buying back stock?
FEDEX CORP (FDX) repurchased $1.8 billion of stock over the trailing twelve months. This represents a buyback yield of 2.7%.
Q: How does FEDEX CORP compare to competitors in Transportation?
Compared to other companies in Transportation, FEDEX CORP (FDX) shows: ROIC of 6.2% is below the sector median of 6.7% (Bottom 46%). FCF margin of 4.8% exceeds the sector median of 4.3% (Top 48% of sector). These rankings are based on MetricDuck's analysis of all Transportation companies with available SEC filings.
Q: What warning signs should I watch for with FEDEX CORP?
Investors in FEDEX CORP (FDX) should monitor these potential warning signs: 1) FCF margin is thin at 4.8%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-12-18. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.