6) FedEx Corporation (NYSE:FDX)
Expected Earnings Growth: 9.7%
Number of Hedge Fund Holders: 59
Forward P/E Multiple (As of September 30): 13.18x
FedEx Corporation (NYSE:FDX) offers transportation, e-commerce, and business services in the US and internationally.
Wall Street believes that FedEx Corporation (NYSE:FDX)’s long-term growth trajectory is expected to be aided by its wide economic moat, which stems from the cost advantage and vast transportation network.
The market believes that significant savings should drive its earnings growth via the DRIVE initiative and implementation of pricing actions. During the release of Q1 2025 results, FedEx Corporation (NYSE:FDX) reaffirmed the forecast of permanent cost reductions from the DRIVE transformation program of $2.2 billion. The company continues implementing pricing actions and has been progressing with its Network 2.0 transformation to boost efficiency.
FedEx Corporation (NYSE:FDX) has been anticipating a recovery in industrial demand and e-commerce growth. Collectively, these factors should aid the company in achieving low single-digit revenue growth for FY 2025. The company is launching FedEx International Deferred Freight Service in a bid to improve profitability via operational efficiencies. It remains optimistic in implementing the additional surcharges and capturing the anticipated General Rate Increase in January.
FedEx Corporation (NYSE:FDX) should be able to capture peak season surcharges and expects that the condensed shopping period might enhance customer understanding of demand pressures. Moving forward, cost reductions, network optimization, and customer experience enhancements should improve its market position.
As per Wall Street, the shares of FedEx Corporation (NYSE:FDX) have an average price target of $306.74. As per Insider Monkey’s Q2 2024 data, FedEx Corporation (NYSE:FDX) was in the portfolios of 59 hedge funds.
Longleaf Partners, managed by Southeastern Asset Management, released its second quarter 2024 investor letter. Here is what the fund said:
“FedEx Corporation (NYSE:FDX) – Global logistics company FedEx was the top contributor for the quarter. Late in the quarter, FedEx reported strong fiscal year results, highlighting a year of strong cost management in a challenging revenue environment. Earnings per share (EPS) increased by 19%, and reduced capital expenditures narrowed the gap between EPS and FCF per share. With the increase in FCF, the company has become a significant share repurchaser, which is a welcome change. The company also announced a strategic review of their Freight segment. Our appraisal has long accounted for the underappreciated value in FedEx’s less-than-truckload operations. A potential spin-off or sale could unlock substantial value, as comparable companies like Old Dominion trade at significantly higher multiples on revenue, cash flow, and earnings than those applied to FedEx Freight by the market and our appraisal today.”
