Is FedEx Stock Attractive After Recent 11% Surge and Efficiency Moves in 2025?

• Ever wondered if FedEx stock is a bargain or overpriced right now? You're not alone, and the answer may surprise you if you take a closer look at how the market sees its value.
• FedEx shares have jumped 11.3% over the past month and are up 4.3% in just the last week, even as they're still down 3.5% year-to-date and 8.2% over the past year. This is a bounce back after a period of underperformance.
• Driving this recent momentum, the company has been in the headlines for streamlining operations and announcing new strategic partnerships in logistics and technology, signalling a renewed focus on efficiency and future growth. Market reaction suggests investors are taking these developments seriously and seeing opportunities ahead.
• On our valuation checks, FedEx scores a 5 out of 6. This is impressive for a large-cap stock, but what's underneath this strong score? Let's dig into the nuts and bolts of FedEx's current valuation, and keep reading to discover a smarter way to evaluate whether it's the right fit for your portfolio.

FedEx delivered -8.2% returns over the last year. See how this stacks up to the rest of the Logistics industry.

Approach 1: FedEx Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting those back to today. This method aims to show what the business is worth based on its ability to generate cash in the years to come. It is a popular approach for long-term investors.

For FedEx, the latest reported Free Cash Flow is $2.63 Billion. Analysts forecast continued growth, with expectations that annual FCF could reach $4.63 Billion by May 2028. Beyond 2028, projections are extrapolated, ultimately reaching about $7.16 Billion in 2035. Most near-term estimates come from analyst consensus while further years use cautious assumptions.

According to this DCF model, the fair value of FedEx shares is estimated at $380.15. With the current market price trading roughly 30.4% below this intrinsic value, the calculation indicates the stock is meaningfully undervalued at the moment.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests FedEx is undervalued by 30.4%. Track this in your watchlist or portfolio, or discover 900 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for FedEx.

Approach 2: FedEx Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation metric for established, profitable companies like FedEx because it relates a company's stock price to its earnings power. For investors, a lower PE can indicate a stock is undervalued relative to its earnings, while a higher PE might signal optimism about future growth or lower perceived risks.

What constitutes a “normal” or “fair” PE ratio depends on growth expectations and risk. Companies with strong earnings growth or lower risk profiles generally command a higher PE, while slower growth or higher risks typically push the ratio lower. Context matters, so benchmarks such as industry averages and peer groups are important for perspective.

Currently, FedEx trades at a PE ratio of 15.17x. This is below the logistics industry average of 16.01x and beneath the average of its closest peers at 19.82x. However, Simply Wall St provides a deeper analysis through its proprietary “Fair Ratio,” which determines what PE multiple is justified for FedEx by considering its earnings growth forecast, profit margins, business risks, size, and how those stack up within the industry. For FedEx, the Fair Ratio is calculated at 18.56x.

Comparing the current PE ratio to the Fair Ratio suggests FedEx is undervalued, since it trades at a multiple over 3 points below what would be justified for its profile today. This approach provides a clearer sense of relative value than simply checking where the company sits versus averages, as it is tailored for FedEx’s unique circumstances.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1418 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your FedEx Narrative

Earlier, we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about a company: it connects what you believe about FedEx’s future, such as its growth, profit margins, and risks, to actual financial forecasts and then to an estimated fair value.

This approach goes beyond only looking at traditional metrics, letting you tie the numbers directly to real-world events or strategies that matter to you. Narratives are user-friendly and available right on the Simply Wall St Community page, where millions of investors share and follow their unique perspectives on companies like FedEx.

By using Narratives, you can quickly compare your fair value for FedEx with the market price, helping you decide if now is the right time to buy or sell. Since Narratives update dynamically whenever new data, such as news or earnings, is released, your view stays current and relevant.

For example, some investors currently see FedEx's fair value as high as $320 if they believe in strong efficiency gains and steady freight demand. Others are more conservative, estimating fair value closer to $200 if risks from economic pressures and contract changes play out. Narratives let you choose the story, numbers, and actions that fit your investing goals.

Do you think there's more to the story for FedEx? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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