Will FedEx Corporation’s (NYSE:FDX) Earnings Grow In The Year Ahead?
After FedEx Corporation’s (NYSE:FDX) recent earnings announcement in May 2018, analyst forecasts appear to be pessimistic, as a -1.2% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 8.9%. Currently with a railing-twelve-month profit of US$4.57b, the consensus growth rate suggests that earnings will drop to US$4.51b by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for FedEx
Can we expect FedEx to keep growing?
The view from 22 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. 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.
By 2021, FDX’s earnings should reach US$5.74b, from current levels of US$4.57b, resulting in an annual growth rate of 7.7%. This leads to an EPS of $22.04 in the final year of projections relative to the current EPS of $17.1. The primary reason for earnings growth is due to cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 7.0%, this movement will result in a margin of 7.3% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For FedEx, there are three pertinent factors you should further research:
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!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
