In 2021, China's air freight and parcel volumes grew 8.2% year-over-year to 7.32 million tons, the Civil Aviation Administration of China (CAAC) said on Wednesday. In addition, the agency reported that the number of international cargo flights was 200,000 in 2021, a 22% increase from 2020. To keep up with demand, 69,000 freighters were converted from passenger aircraft.
Regarding forecasts for this year, the industry is likely to manage air freight and parcel volumes close to 8 million tons. In addition, to cope with this significant increase in demand for air transportation of goods and parcels, China's airfreight and logistics system is committed to transforming air transportation companies from individual carriers to providers of enhanced integrated logistics solutions.
FedEx Corporation (FDX, Financial) appears to have jumped ahead of many competitors to capture increased market share. The U.S. integrated freight and logistics company has added six intercontinental routes in recent months, serving more than 225 flights operating weekly back and forth from the Asia-Pacific region to the U.S. and European markets.
This improvement puts FedEx in a very strong position to take advantage of the expected tailwind from the increase of trade between the People’s Republic of China and Western markets in the coming years.
FedEx is expected to continue to grow its revenue and earnings and earnings, based on analysts. Gains since around mid-2020 helped the board of directors approve a new $5 billion stock buyback program.
For the full fiscal year 2022, the company expects diluted earnings between $20.50 per share and $21.50 per share, while 26 sell-side analysts on Wall Street estimate an average of $20.76 per share.
There is a good chance that FedEx will outpace Wall Street in future EPS, in my view, given the increase in global air freight demand, which could potentially have a very positive impact on the share price.
The stock traded around $256.21 on Wednesday, which determines a market cap of $67.89 billion, a price-earnings ratio of 14.12, a price-book ratio of 2.72 and a forward price-earnings ratio of 12.12.
The industry has medians of 15.98 for the price-earnings ratio, 1.49 for the price-book ratio and of 16.15 for the forward price-earnings ratio.
The share price is stable year-over-year. It is trading between the 50-day moving average value of $247.89 and the 200-day moving average value of $269.09. Thus, the stock doesn't look expensive.
The 14-day relative strength indicator is 54, which means that the stock is neither oversold nor overbought.
The company pays quarterly dividends of 75 cents per common share. The most recent payment was made on Dec. 17, 2021. The stock grants a $3 forward dividend with a yield of 1.17% (versus the S&P 500's yield of 1 .25%) at the time of writing this article.
The balance sheet also looks acceptable from a financial strength standpoint as GuruFocus assigns the company a rating of 5 out of 10.
Wall Street has issued an overweight recommendation rating for shares of FedEx, meaning that the stock is foreseen to outperform either the market or the industry in the coming months. The average target price of $310.35 reflects an upside of 21.13% from current levels.
