FedEx CorporationFDX

Morningstar Rating

Stock Research and Analysis

by Keith Schoonmaker

FedEx increases its formidable competitive advantages by deploying a portion of its cash flow to acquire strategic assets around the globe. It has built a massive international network that's difficult to duplicate, giving the company a narrow economic Read more

Bulls Say

FedEx's huge fleet of aircraft, 42,000 drop boxes, and operations in 220 nations knit together a massive global presence unlikely to be replicated except by its few current competitors.

Expansion of higher-return LTL and international priority businesses should boost revenue growth and consolidated operating margins.

During its 35-year history, FedEx has weathered multiple economic cycles and oil supply crises. While short-term results may suffer, the firm's powerful network is here to stay.

DHL's withdrawal from the domestic U.S. parcel delivery market leaves a larger slice of the pie for FedEx and United Parcel Service UPS.

FedEx's ground segment has a high degree of variable cost because of its use of independent contractors to perform delivery. Contractors are paid on a per-piece basis, so costs move in line with volume. Read more

Bears Say

Although critical to growth, a high level of international exposure makes the firm vulnerable to downturns in global trade and political interference.

Reclassification of independent contractors as employees or organization of drivers would limit control of fixed costs.

While fuel surcharges buffer some of the impact of rapid jet fuel and diesel price shocks, as a transportation company FedEx is exposed to the price of crude oil.

Revenue from FedEx Office (formerly Kinko's) has declined because of low copy demand, and margins remain around break-even. We're skeptical these 1,900 sites contribute more profit than an equivalent number of drop boxes. Read more

Strategy

FedEx is growing via price and volume increases, as well as through acquisitions. Each shipping segment increases prices regularly, and most recover fuel price increases via surcharges. By buying international Read more

Management

Fred Smith, FedEx's founder and the inventor of overnight delivery, remains at the helm of a largely independent board that has guided the firm through years of growth and profitability. The board recently amended company bylaws to adopt two shareholder-friendly Read more

Profile

FedEx, which pioneered overnight delivery in 1973 and remains the world's largest express delivery firm, derives two thirds of its revenue from its express division. The Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Daily Dividend Reports: PEP, ADP, L, AVP, PKY
Watch more