We maintain our Neutral recommendation on FedEx. Although the
company's second quarter fiscal 2014 earnings missed the Zacks
Consensus Estimate, the bottom line remained above the year-ago
level. Despite the challenges in the macro economy, the company
delivered strong earnings year over year on the back of higher
revenues at the Ground and Freight segments coupled with cost
control efforts at the Express segment. Revenues registered
year-over-year growth but remained below our expectation. FedEx
continues to grab growth opportunities internationally with
investments across Asia, Latin America, China, India, Mexico and
Brazil, which improves its competitive position. However, higher
capital expenditure, increased investments in European acquisitions
and estimated subdued revenue performance in the Freight segment
are deterrents to the company's growth.
Based in Memphis, Tennessee, FedEx Corporation is the leader in
global express delivery services. The company provides a broad
portfolio of transportation, e-commerce and business services
through companies competing collectively, operating independently
and managed collaboratively, under the FedEx brand. FedEx has four
major operating segments FedEx Express, FedEx Ground, FedEx Freight
and FedEx Services.
The FedEx Express segment (accounted for 60.7% of 2013 revenues)
includes Federal Express Corporation, which is the world's largest
express transportation company, offering time-specific delivery
within one to three business days and serving markets that comprise
more than 90% of the world's gross domestic product. The FedEx
Express segment also includes FedEx Trade Networks Inc., which
provides international trade services, specializing in customs
brokerage and global ocean and air cargo distribution.
The FedEx Ground segment (23.6%) includes FedEx Ground Package
System Inc., which is a leading provider of small-package ground
delivery service. FedEx Ground provides low-cost, day-specific
service to every business address in the United States and Canada,
as well as residential delivery to nearly 100% of U.S. residences
through FedEx Home Delivery. The FedEx Ground segment also includes
FedEx SmartPost Inc., which specializes in the consolidation and
delivery of high volumes of low-weight, less time-sensitive
business-to-consumer packages using the U.S. Postal Service or
Canada Post Corporation for final delivery to any residential
address or PO Box in the U.S. and Canada.
The FedEx Freight segment (12.1%) includes FedEx Freight
Corporation, which is a leading U.S. provider of
less-than-truckload (LTL) freight services through its FedEx
Freight business (regional LTL freight services) and its FedEx
National LTL business (long-haul LTL freight services). The FedEx
Freight segment also includes FedEx Custom Critical Inc., North
America's largest time-specific, critical shipment carrier.
The FedEx Services segment (3.6%) includes FedEx Services, which
provides sales, marketing and information technology support to the
other companies FedEx TechConnect, which is responsible for
customer service, billing and collection of major business units in
the U.S. and FedEx Office, which provides an array of document and
business services as well as retail access to customers for the
package transportation businesses.
FedEx Corporation (FDX): Read the Full Research
FEDEX CORP (FDX): Free Stock Analysis Report
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