Is FedEx stock undervalued?

All other things being equal, at present asset prices, FedEx stock (NYSE: FDX) is trading below its intrinsic value.

   CHINA - 2022/05/19: In this photo illustration, a FedEx logo is displayed on the screen of a ... [+] smartphone. (Photo Illustration by Sheldon Cooper/SOPA Images/LightRocket via Getty Images) 
  SOPA Images/LightRocket via Getty Images
FedEx's logo is seen on a smartphone screen in this photo illustration. (Photo Illustration by Sheldon Cooper/SOPA Images/LightRocket via Getty Images)

At the current levels, FedEx stock (NYSE: FDX) is undervalued, in our view, following a YTD fall of 11%. The -20% return for the broader S&P500 index was an outperformance with FDX's 11% drop from around $260 in early January to under $230 now.

Looking at the longer term, FDX stock is up 50% from levels seen in late 2019. This marks a slight underperformance compared to its largest peer - UPS stock - which has given a 55% return over this period, while the broader S&P 500 index has risen 18%.

Since late 2019, the stock of FDX has risen 50% due to: 1. FedEx's earnings, which increased 32% to $20.61 in fiscal 2022 (fiscal ends in May) from $15.57 in 2019, on a per share and adjusted basis, and 2. the company's P/E ratio, which grew 13% to 11.1x currently (trailing adjusted earnings), from 9.8x . The growth was primarily driven by higher revenues as discussed below .

FedEx's revenue grew 34% to $93.5 billion in fiscal 2022, compared to $69.7 billion in 2019, driven by sheltering in place and the spread of the Covid virus, resulting in more online orders, aiding its ground shipments since the beginning of the pand

Over the next few years, we expect the company's segments to see steady revenue growth. In the near term, however, headwinds could slow down overall revenue growth in the next few quarters. The double-digit annual growth seen in fiscal 2021 and fiscal 2022 will not be repeated over the coming years.

In fiscal 2022, FedEx’s adjusted net margins were similar to 2019. The company's management expects its operating margins to expand in fiscal 2023, driven by better revenue quality and increased use of technology. In that year, the number of shares outstanding rose by

Despite its apparent strength, FedEx faces challenges from the current weakness in broader markets. The S&P500 has entered bear market territory, with concerns of slowing economic growth rising due to high inflation, Fed action, and supply chain disruptions. These factors are likely to affect FedEx's performance as well.

However, some of these factors have already been priced in by the investors, given the 11% decline in FDX stock. We estimate

While it appears that FDX stock has more room to run, it is helpful to see how FedEx's Peers perform on metrics that are important. You can find other valuable comparisons for companies across industries at

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you'll be surprised how counter-intuitive the stock valuation is for

With inflation rising and the Fed raising interest rates, among other factors, FedEx stock has fallen 11% this year. Can it drop more? See  following paragraph by comparing its decline in previous market crashes.Here is a

If you're looking for a more balanced portfolio, high quality portfolio and

   FDX Return Compared With Trefis Multi-Strategy Portfolio  
The Trefis Multi-Strategy Portfolio is a good way to track the performance of FedEx.

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