Friday, November 20, 2015

FedEx: 25-50% Upside Potential In 12 Months $FDX #Earnings

*About to clear peak investment.
*Highest margin business growing the fastest and accelerating the overall pie.
*E-commerce exposure a benefit in the holiday season.
*Return ratios to accelerate over the next 12 months.




FedEx (NYSE:FDX) has been given credit for its exposure to e-commerce but we believe that reported numbers are going to start more clearly exposing the faster growth rates associated with the e-commerce industry. Faster growth rates should lead to earnings acceleration and a pickup in returns ratios offering FedEx a higher earnings multiple and higher stock price.
Overall, top line revenues were up about 6% last quarter, which was faster than any time in the last few years, but we think it can continue to accelerate.
Add to that, the bottom line and returns ratios, as we pass a major expense push this year, should also see accelerating numbers.
What we like to see in companies is that a strong secular dynamic actually shows up to make a difference to a company's operations.
We spoke with the investor relations team who told us that 40-50% of their business now is exposed to e-commerce, which is growing at 9-11%, faster than the overall company.
So, you may ask, why is that not showing up in their numbers? First of all, it is ........
Read Full Article On Seeking Alpha

Chaim Siegel has been working for hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings, earnings events as well as developing current company and macro stories with a hedge fund perspective. If you want his analysis real time scroll down for real time email alerts.
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