FEDEX updated October 29, 2020

The report for FedEx is updated and it is rated Weak Buy / Hold at U.S. $264.  I had rated FedEx a Sell in early February becasue it had reported a string of very weak quarters and was forecasting that to continue in the short term. It had already taken over 5 years to integrate a large acquisition in Europe (TNT) and was continually adding back expenses related to that and the integration period was continuing which seemed like a bizarrely long time. So, with a number of stumbles, I was losing faith in management.

It did go on to post two more bad quarters and a poor fiscal year ended May 31. But then its quarter ended August 31 benefited greatly from the pandemic and the surge in online ordering. It also faced less competition from passenger airlines that usually also carry parcels.

So, its earnings outlook is now much much brighter especially as the pandemic continues. But the share price also surged greatly. Therefore, it does not rate a Buy.

It has been a surprisingly volatile company and stock over the years. And profit margins on its overnight express deliveries have been thin. It is the ground operations that are more profitable.

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