) has raised its quarterly dividend by 5 cents per share to 20
cents. The increased dividend is payable on July 3 to
stockholders of record on June 19. The current dividend hike
represents a consecutive return to customers following last year's
increase by a penny.
We believe FedEx's focus on enhancing investor return is
bolstered by strong financial strength achieved on the back of
healthy operational efficiency across all its segments. The company
expects earnings of $2.25 to $2.50 per diluted share in the fourth
quarter and $6.55 to $6.80 per diluted share for fiscal 2014. The
company is counting on its profitability improvement to support its
high earnings estimates. We expect this earnings growth to, in
turn, support higher returns to the shareholders.
Besides the dividend payout, FedEx is also considering
undertaking its share repurchase program. During the first nine
months of fiscal 2014, the company repurchased 15.6 million shares
for $2 billion. As of Feb 28, 2014, the company had repurchase
authorization existing for 15.2 million shares.
Following a buyback program for 32 million shares initiated in
Oct 2013, the company entered into an accelerated share repurchase
agreement with two banks in Jan 2014 to buy back an aggregate of
$2.0 billion worth of its shares. Under this agreement, the company
received 11.4 million shares till the third quarter of fiscal
We believe such initiatives, besides adding value to investors,
also help to foster the market valuation of FedEx. This naturally
provides the company a competitive advantage over other players
United Parcel Service, Inc.
Expeditors International of Washington Inc.
Radiant Logistics, Inc.
FedEx currently has a Zacks Rank #3 (Hold).
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