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FedEx (FDX) Stock Up More than 100% in 6 Months: Here's Why

Zacks Equity Research
·3 mins read

Despite being under pressure due to coronavirus-led woes impacting air cargo capacity, FedEx Corporation‘s FDX shares have gained 117.2% in the past six months compared with the  industry’s 98% increase.

What’s Working in Favor of the Stock

FedEx has an impressive cash position. The company exited the first quarter of fiscal 2021 with cash and cash equivalents of $6,954 million, above the debt load (current portion) of $87 million. This indicates that the company has sufficient cash to meet its current debt obligations. Additionally, the company's current ratio, a measure of liquidity, was pegged at 1.69 at the end of the first quarter of fiscal 2021 compared with the industry's average of 1.27. This liquidity ratio measures a company's ability to pay short-term obligations.

Surge in e-commerce demand during the current coronavirus-ravaged times has aided FedEx's first-quarter fiscal 2021 results. E-commerce, which already became part and parcel of daily lives in today’s fast-paced world, is witnessing higher demand now amid the pandemic-induced social-distancing protocols and quarantines. The company's performance in the quarter was driven by higher Ground revenues (up 36%) on residential delivery volume growth. Additionally, with coronavirus-led restrictions relaxed and businesses having opened up, the company has been witnessing week-over-week improvement in commercial volumes since May.

We are also pleased with the company’s efforts to reward its shareholders even in these difficult times.  Notably, its dividends have increased at a five-year CAGR of 26%.

Northward Estimate Revisions

Driven by the above-mentioned tailwinds, the Zacks Consensus Estimate for current-quarter earnings has been revised 69.2% upward in the past 60 days. Similarly, the Zacks Consensus Estimate for 2020 earnings has moved up 44.7% in the past 60 days.

Zacks Rank & Other Stocks to Consider

FedEx currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings KNX, Canadian Pacific Railway Limited CP and Werner Enterprises WERN. Knight-Swift sports a Zacks Rank #1, while Canadian Pacific and Werner carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, Canadian Pacific and Werner is pegged at 15%, 8.5% and 8.5%, respectively.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.

The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.

Click Here, See It Free >>
 


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FedEx Corporation (FDX) : Free Stock Analysis Report
 
KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
 
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Zacks Investment Research