FedEx Corporation (FDX) is the leader in global express delivery services. The company provides a broad portfolio of transportation, e-commerce, and business services.
The company primarily reports through three segments - FedEx Express (including TNT Express acquired in 2016), FedEx Ground, and FedEx Freight Segment. These segments contributed 50%, 36.3%, and 9.3%, respectively, to the company’s total revenues in fiscal 2021.
Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should know.
FedEx Risk Factors
According to the new Tipranks Risk Factors tool, FedEx’s main risk category is Finance & Corporate, which accounts for 22% of the total 27 risks identified. The next two major risk factor contributors are Legal & Regulatory and Production, which also stand at 22% each.
Since May, FedEx has added two new risk factors, removed three risks, and changed six risk factors. (See FedEx stock charts on TipRanks)
Let us discuss here the new risk factors:
Under the Finance & Corporate category, FedEx highlights that it might not be able to achieve the carbon neutrality goal by 2040. According to the company, achieving this goal is contingent on the adoption of certain operational initiatives related to vehicle electrification, investment in alternative fuels, fuel conservation, and so on. However, implementation of these measures comes with risks and uncertainties, many of which are beyond the company's control.
Under the Legal & Regulatory category, FedEx acknowledges that the emerging regulatory laws on data protection in the United States and other foreign countries, as well as any inability to comply with these laws, might materially impact its business and financial conditions.
The company stated that the increasing regulations, as well as the enforcement of these laws, result in enormous expenses and regulatory concerns, which are only going to grow over time.
FedEx Financial Performance
Now let us dive into the company’s financial performance for the fiscal year 2021. The company delivered healthy financial performance, including record revenue and profit for the full fiscal year, driven by strong e-commerce operations, operational excellence, and digital innovation. This helped the company register a 21.3% year-over-year jump in revenue to $84 billion.
The operating margin came in at 7% versus only 3.5% in the prior year. The diluted earnings per share came in at $18.17, up 91.3% year-over-year.
Increasingly, demand for same-day goods delivery has been rising, buoying shipping corporations like FedEx. To cash on this opportunity, FedEx on July 16 announced that its subsidiary, FedEx Express, would invest $100 million in Delhivery, a shipping company in India. Per the agreement, Delhivery will sell FedEx Express products and services in India, allowing the latter to boost its market share and gain an edge over its competitors.
CEO of FedEx Frederick W. Smith said, “We continue to play an important role in global economic recovery and the delivery of COVID-19 vaccines and relief supplies throughout the U.S., Canada, and more than 35 other countries.
Smith added, “I am optimistic about the future of FedEx as we continue to innovate for our customers and meet strong demand for our global transportation network and capabilities.”
Wall Street’s Take on FDX
On TipRanks, FDX has an analyst rating consensus of Strong Buy, based on 20 Buy ratings, 3 Hold Ratings, and 1 Sell rating assigned in the last three months.
As for price targets, the average FDX price target is $355.45, reflecting a potential 12-month upside of 20.6% from current levels.
The Finance & Corporate risk factor’s sector average is 43%, compared to FedEx’s 22%. Shares are up 79.6% over the past year.
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