FedEx Cost Cuts and Upbeat Outlook Send Shares 14% Higher: 3 Other Reasons to BUY FDX

It had been a tough past few months for FedEX (FDX) investors, who watched their positions plummet 14%. But shares have recovered all that and more today after the delivery company released positive 4th quarter results for fiscal 2024.

Earnings came in at $5.94 per share, which was ahead of the analyst expectation of $5.34 but lagged behind last year’s performance of $6.05. Meanwhile, revenue of $22.1 billion narrowly outperformed the $22.04 billion consensus and showed slight improvement year over year.

It’s been a few years of trickling demand for shipping amidst a global industrial production overall. This was driven by inflation in the wake of COVID-19. 

To make matters worse for FedEx, the company is set to part ways with the U.S. Postal Service in just a couple of months, as the government delivery service has partnered with UPS.

But, there is reason to be optimistic about the road ahead. Experts are forecasting improvements in shipping volumes across the country. Further to that point, pirate attacks on sea shipping routes could elevate profits coming from air shipments out of Asia.

This has led to an upbeat outlook for the year ahead, as FedEx is expecting low-to-mid single-digit growth in revenue for fiscal 2025. The earnings forecast has been set between $18.25 and $20.25.

Profits will get a boost as FedEx seeks to cut up to $2.2 billion in costs and create harmony across its different channels of operation. It’s already started consolidating ground and express units along with a few other businesses into one unit.

The company allocated $5.2 billion toward capital spending, much of which will be spent on optimizing operational efficiency across the business – automating whatever they can in their facilities and fleets.

After today’s rally, FDX is up nearly 17% through 2024 thus far. We took a deeper look at this opportunity in the VectorVest stock analysis software and found 3 other reasons to consider buying this stock today.

FDX Has Very Good Upside Potential and Timing With Fair Safety, Earning the Stock a BUY

VectorVest simplifies your trading strategy by telling you what to buy, when to buy it, and when to sell it, all in 3 proprietary ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).

Each sits on its own scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation. Better yet, the system issues a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we found for FDX:

• Very Good Upside Potential: The RV rating is a far superior indicator to the typical comparison of price to value alone. It compared the stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. The RV rating of 1.30 is very good for FDX, and the stock is undervalued. Its current value is $367/share.
• Fair Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 0.92 is fair for FDX, albeit slightly below the average.
• Very Good Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year. FDX has a very good RT rating of 1.34, reflecting the performance shown today.

The overall VST rating of 1.20 is good for FDX and enough to earn the stock a BUY. But before you go and execute that trade, take a moment to review this free stock analysis we created for you and make your next move with complete confidence and clarity!

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VectorVest advocates buying safe, undervalued stocks, rising in price. FDX is climbing after fiscal Q4 earnings coupled with an upbeat outlook for the year ahead, including massive cost cuts that should drive profitability and shareholder value. The stock itself has very good upside potential and timing with fair safety.

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