A Look Inside FedEx's Second Quarter Earnings - Research Report on FedEx Corporation

   A Look Inside FedEx's Second Quarter Earnings - Research Report on FedEx

Analysts expect FedEx to deliver much higher returns despite missing its
second quarter 2012 earnings estimate. By 2016, the company's profit
improvement program is also expected to increase annual profit by $1.7

PR Newswire

NEW YORK, January 24, 2013

NEW YORK, January 24, 2013 /PRNewswire/ --

Despite earning only $1.39 per diluted share for the second quarter of 2012,
analysts are still confident that FedEx Corporation (NYSE: FDX) [Full Research
Report]^[^1^] is an ideal company to invest in. FedEx's second quarter 2012
earnings missed the consensus estimate by $0.02 and its earnings are also
lower compared to the $1.57 per share earned by the company in the same
quarter of 2011.

FedEx states that super storm Sandy had affected the quarterly results by
$0.11 per diluted share due to reduced shipment volumes and incremental
shipping costs. Without the losses caused by the untimely weather disruption,
FedEx's actual profit is computed to be at $1.50, beating the analysts'
estimate of $1.41. Jyske Bank's Senior Equity Analyst Robert Jakobsen also
upheld a buy rating on FedEx with a 12-month target price of $115. He believes
that the company's shares are considered undervalued at current levels because
FedEx still has a strong foundation, a skilled management team, and a
well-regarded brand. "It remains in our view that FedEx will win market share
in all divisions," the analyst says.

The company has also put into effect its profit improvement program, which
targets a $1.7 billion increase in annual profit by the end of 2016. The
company anticipates to increase its dividends in the years to come through a
combination of cost reductions, efficiency improvements and service
repositioning. According to Frederick W. Smith, FedEx chairman, president and
CEO, "Our overall strategy is closely tied to effective yield management. The
key is striking the right balance between volume growth and yield

Furthermore, FedEx management is proving to be more prudent when it comes to
making long-term business decisions. After the deal between United Parcel
Services (NYSE: UPS) and TNT Express fell through last week, many have assumed
that FedEx will take over the deal and place a bid at TNT. However, FedEx is
passing on making any offers to see if the stock price for TNT will rise again
after dropping to 0.41% or $6.47. Furthermore, FedEx management may be
hesitant to pursue the deal due to the possibility of meeting the same fate
that UPS met in attempting to acquire TNT.

With positive growth, a strong balance sheet and consistent cash flow,
analysts are confident that FedEx will deliver a strong performance for the
coming year. As the business continues to expand, and strong margins show that
the company is turning revenue into profit. For FedEx to improve, the company
must work on boosting growth and getting its dividend up to par with the
yields that UPS pays out. However it must be noted, that FedEx has a 3-year
projected earnings growth rate of 12.5%, ahead of UPS, with a 3-year average
growth rate of 11.1%. FedEx is the cheaper option and has a greater growth

Reference Links:

^[^1^]The Full Research Report on FedEx Corporation - including full detailed
breakdown, analyst ratings and price targets - is available to download free
of charge at:

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