Looking at FedEx Corporation’s (NYSE:FDX) earnings update in February 2019, analysts seem cautiously bearish, with profits predicted to rise by 11% next year relative to the higher past 5-year average growth rate of 22%. Currently with trailing-twelve-month earnings of US$4.6b, we can expect this to reach US$5.1b by 2020. Below is a brief commentary on the longer term outlook the market has for FedEx. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Exciting times ahead?
Over the next three years, it seems the consensus view of the 23 analysts covering FDX is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of FDX’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$4.6b and the final forecast of US$6.1b by 2022, the annual rate of growth for FDX’s earnings is 12%. This leads to an EPS of $19.38 in the final year of projections relative to the current EPS of $17.1. With a current profit margin of 7.0%, this movement will result in a margin of 8.1% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For FedEx, there are three relevant factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is FedEx worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FedEx is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FedEx? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.