FedEx stock is one of the world’s largest parcel delivery companies. The company provides transportation, e-commerce, and business services to its customers. FedEx (NYSE: FDX) operates with the motto “Compete collectively, operate collaboratively and innovate digitally.”

FedEx has five business segments. According to its latest annual report, the segments include FedEx…

• Express: The world’s largest express transport company. FedEx Express offers time-sensitive delivery to more than 220 countries, which make up more than 99% of the world’s gross domestic product.
• Ground: A leading provider of small-package ground delivery services in North America. FedEx Ground Economy specializes in consolidating and delivering high volumes of low-weight, less time-sensitive business to consumer packages. FedEx Ground provides low-cost day-certain service to any business address in the U.S. and Canada and home delivery to 100% of U.S. residences.
• Freight: A leading provider of less-than-truckload freight services in North America to businesses and homes. Within the contiguous U.S., the segment offers FedEx Freight Priority when speed is vital to meet supply chain needs. FedEx Freight Direct is a service to meet the needs of the growing e-commerce market for the delivery of bulky products to the door of homes and businesses.
• Services: Provides sales, marketing, IT, communications, customer service, tech support, billing services and some back-office functions that support its operating segments.
• Office: Provides document and business services and retail access to its package transport businesses.

FedEx Stock Forecast

Analysts making FedEx stock forecasts have an average 12-month price target of $290.45 for the stock over the last three months. The highest of the analyst’s price targets is $333, and the lowest is $231.

The current price for FedEx stock is about $206. Interestingly, the analyst’s 12-month price targets is that even the lowest price target is above the current stock price. The stock could return 12% over the next year if the lowest price target is right.

If the highest price target is right, the stock could return 62% over the next year. The average price target would give investors a return of 41%. Altogether, the analyst’s price targets show that their FedEx stock forecasts are optimistic.

FedEx’s most recent quarterly report forecasted certain metrics for its full fiscal year results. The forecast noted that FedEx could not forecast adjustments to its retirement plan accounting quite yet. Before the adjustments, FedEx believes it will have earnings per share in the range of $18.60 to $19.60 for the year. In addition, the company forecasts capital spending in a range of $7 billion to $7.2 billion.

On average, the analyst’s making forecasts for FedEx’s full-year earnings per share think the company will report $20.56. The analysts’ earnings per share forecast include adjustments for retirement plan accounting. The analysts appear confident in their forecasts because none have changed over the last four months.

FedEx will put out its full fiscal year financial results on June 23rd. At 5 p.m. Eastern Time, the company will host a webcast where managers will discuss the results. When the managers are done talking, the managers will take questions from listeners. More information about the webcast can be found on the company’s Investor Relations website.

Is FedEx Stock a Buy?

Analyst’s making recommendations have rated the stock a ‘Strong Buy.’ In the last three months, 18 analysts have ratings on FedEx stock. The analysts seem to be very optimistic about FedEx stock.

A quick valuation of FedEx stock shows that the stock trades at a P/E ratio of 11x. The current stock’s P/E ratio is lower than its five-year average of 15x. That means the stock may be a better value now than it has been in the past. On top of that, the stock pays a dividend yield of 1.45%.

The favorable valuation is partly due to the stock being down. Over the last year, FedEx stock has fallen nearly 30%. Over the same time, other stocks have fallen, but not as much as FedEx stock. For instance, the broader S&P 500 index is only down 8% over the same time.

FedEx has also bought back shares. When companies buy back shares, they reduce the number of company shares. When a company reduces the number of shares, future profits are split between fewer shareholders. Share buybacks can increase the company’s P/E ratio.

During the last quarter, FedEx completed its share buyback program. In doing so, the company bought back 6.2 million shares, which increased earnings per share by $.06. For the next quarter, analysts forecast that FedEx will report earnings per share of $6.80 on average.

Earnings Report

FedEx stock reported adjusted earnings per share of $4.59 last quarter. That was an increase of 39% over the same quarter last year when the company reported $3.30 in earnings per share. The average analyst earnings per share forecast for the quarter was $4.69. FedEx missed the forecast by $.10.

On March 17, FedEx put out a press release about its third-quarter results. In the press release, the company said sales grew 9.8% over the third quarter of last year to $23.6 billion. In addition, operating income for the quarter grew 38% to $1.46 billion.

When margins grow, the company makes more income for every dollar of sales. When income grows faster than sales, the company’s margin grows. During the quarter, FedEx’s operating margin rose to 6.2%, better than 4.9% in the same quarter of last year.

In the press release, CEO Frederick W. Smith said, “The continued execution of our strategies drove improved third quarter results. I am proud of our team members around the world, who are constantly proving their resilience amidst a rapidly evolving global environment. FedEx is supporting our team members and others affected by the ongoing conflict in Ukraine as we hope to soon see a return to peace.”

After the press release, FedEx hosted a webcast about the third-quarter results. On the webcast, managers talked about the results. When the managers were done with their talk, they took questions from listeners. You can find a replay of the webcast here.