FDX: Buy FedEx Despite Its Mixed Earnings

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With Christmas just days away, people are rushing to deliver gifts and cards to loved ones. The holiday season is undoubtedly the busiest time for companies like FedEx Corporation (FDX).

FedEx FDX FedEx stockAmid the holiday rush, FDX also released its second-quarter earnings report. Did FedEx meet expectations?

FedEx – Company Profile

FedEx is the second largest package delivery company in the world. FedEx is diversified across a variety of logistics services, including ground transportation, freight shipping, airline shipping and printing and copying services.

With over 230,000 full-time employees worldwide, FedEx brought in over $45 billion in sales last year.

FedEx –Earnings Rundown

This week, FedEx released Q2 earnings, which underperformed expectations. FDX reported second-quarter earnings of $2.12 per share whereas analysts had estimated $2.22 per share. So, FedEx posted a 3.6% earnings miss.

FedEx’s net income for the quarter was $616 million, a 23.2% increase year over year. Over the same period, revenue rose 5% to $11.94 billion, missing Wall Street’s estimate of $11.98 billion.

Looking ahead, FedEx estimates full year 2015 earnings to be between $8.50 and $9.00 per share, below the Street view of $9.12 per share. Compared with fiscal 2014, this translates to 26% – 33.3% annual earnings growth. FDX shares dropped sharply lower on Wednesday after the mixed earnings report.

FedEx – Current Ratings

FedEx started off the year in “hold” territory, but FDX stock edged its way into “buy” territory by spring due mostly to strong buying pressure. FedEx receives an A for its Quantitative Grade.

On the fundamentals side, FDX stock receives a B. Of the eight fundamental metrics that I graded FedEx on, it scored well on operating margin growth (A), earnings growth (B), earnings momentum (B), analyst earnings revisions (B) and return on equity (B). FedEx receives C grades for sales growth, earnings surprises and cash flow. These are solid grades, but there is a chance that some of them may be downgraded after FDX stock’s latest earnings announcement.

As of this posting, I consider FDX a B-rated “(cautious) buy.”

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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