In today’s fastest growing and globalized world, courier industry plays a pivotal role. They ship parcels, documents etc. from one place to another very shortly. E-commerce industry is booming, and the courier industry has become an integral part of e-commerce development. Now, if we compare e-commerce to a car, then we can say that the courier industry is like oil for this car. Without timely delivery of customer orders, the benefits of online shopping cannot be fully received by customers. Thus, as e-commerce continues to grow, so should package delivery companies that directly serve and support it. One great player playing well in this courier industry is FedEx Corporation (NYSE:FDX).
About This Great Player
With a market cap of $44.74 billion, FedEx is a global provider of time-sensitive package and freight delivery services serving the delivery needs of individuals and businesses in over 220 countries. It started overnight delivery in 1973, and is now the world's largest express delivery firm. With over 54,000 delivery vehicles, 660 aircraft, and over 58,000 drop-off boxes, this Memphis, TN- based company is the second-largest global package delivery service in the world. The Company operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services.
- Warning! GuruFocus has detected 3 Warning Signs with FDX. Click here to check it out.
- FDX 15-Year Financial Data
- The intrinsic value of FDX
- Peter Lynch Chart of FDX
Looking Into the Numbers
On June 18, 2014, this logistic expert reported its fourth-quarter fiscal 2014 results. Quarterly adjusted earnings for the fourth quarter ended May 31 were $2.46 per diluted share, compared to the year-ago adjusted earnings of $2.13 per diluted share. Total revenue during the fourth quarter totalled to $11.8 billion, higher than $11.4 billion reported in the fourth quarter of fiscal 2013. For fiscal 2014, FedEx reported earnings per share of $6.75 (up 8.3% year over year) on revenues of $45.6 billion (up 2.9% year over year). Operating income improved 7.3% year over year to $1.18 billion in the fourth quarter, and operating income for fiscal 2014 improved 7.5% year over year to $3.45 billion. Further, a chart has been provided below to show the company’s segment wise performance.
FedEx Services' revenues fell 1% year over year to $402.0 million in the fourth quarter.
For fiscal 2014, this logistic expert has cash and cash equivalents of $2.9 billion, compared with $4.9 billion at the end of fiscal 2013. Further, the company’s long-term debt was $4.7 billion, up from $2.7 billion in the fiscal 2013, and capital expenditure at the end of fiscal 2014 was $3.5 billion. During the fourth quarter, the company bought back 9.9 million shares, resulting in the total repurchase of 36.8 million shares in fiscal 2014. As of May 31, 2014, 5.3 million shares remained under the existing share repurchase authorizations.
For fiscal 2015, FedEx estimates earnings in the range of $8.50 to $9.00 per share. Further, the company expects capital expenditure of $4.2 billion. FedEx Corp. chairman, president and chief executive officer Frederick W. Smith said that the company is well positioned for a strong fiscal 2015.
On May 2, 2014, this logistic expert has completed the acquisition of Supaswift businesses in South Africa and six other countries, which are Botswana, Malawi, Mozambique, Namibia, Swaziland, and Zambia. Increased control in its regions of operation will allow the company to expand further and bring more markets into its reach. A chart has been provided below to show the company’s long-term financial goals.
Chart from company website
On a Concluding Note
From the Q4 earnings it can be said that the company is well positioned for fiscal 2015. FedEx performed well from an earnings standpoint as well as from a profitability perspective. This logistic expert’s metrics came in even stronger during this five-year period, as profit rose from $98 million to $1.56 billion.
Further, FedEx is adjusting to new business trends by implementing new technology and processes to improve flight and crew scheduling. To improve the fuel efficiency of its aircraft and vehicle fleets, FedEx is implementing process changes. E-commerce business is gaining its momentum; this will help FedEx move ahead in the future. Additionally, this player has continued its long-term trend of growth, which will positively help to strengthen its foothold. I am therefore pretty bullish that FedEx won’t let its valued customers as well as investors down in the near future.