Core Viewpoint - FedEx Corporation (FDX) shares have outperformed its industry despite weak package volumes, with an 11.2% gain in 2024 compared to declines in its industry and rival UPS [1][4]. Financial Performance - FedEx reported lower-than-expected revenues for Q2 of fiscal 2025, with average daily shipments falling 8% year over year [5]. - The company has trimmed its earnings per share outlook for fiscal 2025 to $19-$20 from a previous forecast of $20-$21, marking the second reduction in three months [6]. - FedEx now expects flat revenue growth year over year for fiscal 2025, down from a prior expectation of low single-digit percentage growth [7]. Cost Management Initiatives - FedEx is implementing a companywide cost-cutting initiative called DRIVE, which has resulted in cost reductions of $1.8 billion in fiscal 2024, with an additional $2.2 billion expected by the end of fiscal 2025 [10]. - The company is realigning costs by reducing flight frequencies, parking aircraft, and cutting staff to improve its bottom line [9]. Spin-Off Announcement - FedEx plans to spin off its freight trucking division into a separate company to focus on its core delivery business, with the separation expected to occur within the next 18 months [12][14]. - The spin-off is anticipated to create value for shareholders by allowing both companies to pursue independent growth strategies while maintaining operational cooperation [13][14]. Valuation and Shareholder Returns - FedEx shares are currently trading at lower levels than its industry based on the forward 12-month price/earnings ratio, with a Value Score of A [15]. - The company raised its quarterly dividend by 10% to $1.38 per share in June 2024, indicating a commitment to rewarding shareholders [18].

Group 1: Market Overview - The new year presents an opportunity for investors to align with Wall Street firms to kick off the first quarter positively [1] - Insider buying activity can provide insights into potential investment opportunities, with stocks like Nike, FedEx, and Occidental Petroleum attracting attention from institutional buyers [2] Group 2: Nike Inc. (NKE) - Nike's stock has dipped to 68% of its 52-week high, presenting a rare buying opportunity for investors [3] - Analyst ratings for Nike indicate a moderate buy with a projected upside of 22.1% and a projected earnings growth of 14.34% [4] - Billionaire investor Bill Ackman has accumulated a stake of up to 3 million shares, betting on Nike's international exposure and brand strength to recover [5] - Analysts from Robert W. Baird have set a price target of $105 per share for Nike, indicating a potential upside of 43.2% [6] Group 3: FedEx Co. (FDX) - FedEx stock is currently trading at 87% of its 52-week high, with insider buying activity indicating confidence in its upside potential [7] - The stock has a moderate buy rating with a projected upside of 17.6% and projected earnings growth of 13.78% [8] - J.P. Morgan Chase has reiterated an overweight rating on FedEx, setting a price target of $370, which would require a 35% rally from current prices [9] Group 4: Occidental Petroleum Co. (OXY) - Warren Buffett has acquired up to 29% of Occidental Petroleum stock, indicating strong confidence in the energy sector [11] - The stock trades at a price-to-book ratio of 2.0x, significantly lower than the sector average of 3.6x, presenting a value opportunity [12] - Analysts from Mizuho have set a price target of $70 per share for Occidental, suggesting a potential rally of 38.6% from current levels [13]

Analyst Background - The analyst is an Associate Professor in Finance and Corporate Governance at Brunel University London and holds a CFA charter [1] - The analyst has a PhD in Finance from the University of Durham, UK, and six years of investing experience in Indian and US equities with a medium to long-term horizon [1] - The analyst actively researches Behavioral Finance, Corporate Governance, Activist Hedge Funds, Cryptocurrencies, and M&A, and has published in top-ranked peer-reviewed journals [1] - The analyst produces and hosts a weekly investing podcast titled *The Stock Doctor* [1] FedEx Analysis - The analyst previously discussed FedEx Corp (NYSE: FDX) and dissected the company's Q1 report, expressing skepticism about management's optimism in Europe [2] - The analyst reiterated concerns about the sustainability of FedEx's European operations [2]

FedEx Freight Overview - FedEx Freight is a leading North American provider of LTL freight services, offering FedEx Freight Priority, FedEx Freight Economy, and FedEx Freight Direct to meet diverse customer needs [1] - The segment generated $9.4 billion in revenue in FY24 and serves virtually every U.S. ZIP Code, including Alaska and Hawaii, with industry-leading transit times [1] - Internationally, FedEx Freight operates in Canada and Mexico, offering cross-border and intra-country LTL services [1] Financial Performance - For 2Q25, FedEx Freight segment revenue was $2.2 billion, down 11.2% YoY, primarily due to lower shipment volumes and reduced yields [14] - Operating income for 2Q25 dropped 36.5% YoY to $312 million, with operating margin declining 570 bps to 14.3% [14] - For 1H25, FedEx Freight revenue was $4.5 billion, down 6.8% YoY, with operating income falling 22.8% YoY to $751 million [15] Strategic Spin-Off - FedEx announced the spin-off of its Freight business to create a new publicly traded company, aiming to unlock market value and achieve a premium valuation similar to competitors like Old Dominion Freight Line [8] - The spin-off is expected to enhance operational focus, accountability, and agility for both FedEx and FedEx Freight, with an estimated enterprise value of $30-35 billion [8][9] - Post-separation, FedEx Freight will be the largest LTL carrier with a 17% market share and the broadest network in the industry [10] Operational Highlights - FedEx Freight operates nearly 30,000 motorized vehicles from approximately 360 service centers and employs around 40,000 people [20] - The segment has maintained its leading market share position while increasing operating profit by nearly 2% annually over the last five years, with 1,100 basis points of operating margin expansion [10] - FedEx Freight Direct addresses the growing e-commerce market for big and bulky products, offering flexible delivery windows and end-to-end visibility [20] Company-Wide Financials - For 2Q25, FedEx recorded revenue of $21.97 billion, down 0.9% YoY, with operating income declining 17.6% YoY to $1.05 billion [3] - Net income for 2Q25 was $741 million, down 17.7% YoY, with diluted EPS of $3.03, down 14.6% YoY [3] - For 1H25, FedEx revenue was $43.5 billion, down 0.7% YoY, with operating income falling 22.8% YoY to $2.1 billion [21] Outlook and Initiatives - FedEx revised its FY25 outlook, expecting flat revenue YoY and diluted EPS of $16.45-$17.45, excluding MTM adjustments [7][16] - The DRIVE transformation program is expected to create $4 billion in cost savings by FY25, while Network 2.0 aims to generate $2 billion in savings by FY27 [10] - FedEx plans to repurchase an additional $500 million of common stock in FY25, bringing the total buyback to $2.5 billion [17] Industry Position - FedEx Freight is positioned to benefit from a strong balance sheet and deep customer relationships, maintaining its leadership in the LTL market [10] - The spin-off aligns with FedEx's strategy to reduce capital intensity, increase capital returns, and focus on operational efficiency [10] - FedEx Freight's separation is expected to provide unique investment profiles for both entities, preserving operational and technological synergies [9]

Core Insights - FedEx has historically been a lower-margin business compared to UPS but has managed to protect its margins in recent years, while UPS' margins are at a 10-year low [2] - The industrial sector is experiencing a trend of breakups for increased flexibility, with companies like Honeywell considering spinoffs in response to investor dissatisfaction [3] - FedEx has lowered its fiscal 2025 revenue forecast to flat growth and adjusted its earnings per share target down to $19-$20, while continuing to focus on cost-cutting and efficiency [4] - Both FedEx and UPS have underperformed the S&P 500 due to an oversupplied package delivery network and challenges from the pandemic [6][7] - FedEx Freight, while smaller, has historically had higher margins compared to the broader FedEx business [8] Financial Performance - FedEx's total revenue for the trailing twelve months (TTM) is $87.39 billion with an operating margin of 6.72% [15] - UPS's TTM revenue stands at $90.69 billion with an operating margin of 8.84% [15] - FedEx has a forward price-to-earnings ratio of 14.3, while UPS's is 16.8, indicating that FedEx may be a more attractive value for investors [9] Strategic Developments - FedEx plans to separate into two public companies, FedEx and FedEx Freight, to enhance focus and agility [16] - UPS has realigned its business strategy to focus on higher-margin segments, such as healthcare products, and has returned to volume and profit growth [17] - UPS has resolved labor disputes that previously increased costs, improving its outlook for 2025 [18] Investment Considerations - Both FedEx and UPS are viewed as compelling investments, with UPS being preferred due to its defined turnaround strategy and higher dividend yield of 5.2% compared to FedEx's 2% [9][20][21] - UPS's ability to maintain its dividend amidst macroeconomic uncertainty makes it a more attractive option for investors [21]

Core Viewpoint - FedEx Corporation's stock is experiencing a downtrend following the announcement of earnings and plans to separate its Freight Unit, indicating "bad action" in the market [1]. Group 1: Stock Performance - FedEx shares opened approximately $20 higher on December 20 after the earnings announcement, but ultimately closed lower, reversing all gains, which reflects "weak action" and bearish control [1]. - The stock broke the support level at $275, further exemplifying "bad action" in the market [2]. Group 2: Market Dynamics - Support levels typically form at previous resistance prices due to sellers wanting to buy back shares at the same price, but the support at $275 lasted only three days before being broken by higher sell orders [3]. - The absence of a rebound after the stock's significant drop indicates that buyers are not entering the market, suggesting continued bearish sentiment and a likelihood of further declines for FedEx [3].

Core Insights - FedEx shares surged following the fiscal Q2 2025 earnings report due to a strategic plan to spin off its struggling freight business, which is negatively impacting the core FedEx Express operations [1][3] - The spin-off is expected to be tax-efficient and completed within the next 18 months, allowing the remaining business to focus on growth and improved operating performance [2] Financial Performance - FedEx reported $22 billion in net revenue for Q2, a decrease of nearly 1% year-over-year, which was weaker than expected but offset by margin strength [3] - The operating margin contracted by 100 basis points, but the adjusted earnings of $4.05 were significantly above consensus forecasts, driven by cost reductions [3][6] - The company has increased its revenue forecast while trimming its earnings target, with expectations of flat revenue compared to the prior year and nearly 10% earnings growth due to cost savings and share buybacks [6] Share Buybacks and Capital Returns - FedEx accelerated share buybacks in Q2, repurchasing $1 billion in shares, which impacted quarterly results by $0.07 per share and reduced the share count by 3.55% [7] - The company plans to buy back an additional $0.50 billion this year, with $3.1 billion remaining on the current authorization for the next fiscal year [7] Market Sentiment and Analyst Ratings - FedEx's stock is currently rated as a "Moderate Buy" with a price target of $324.88, indicating a potential upside of 20.8% [4] - Following the earnings release, analysts have shown a bullish shift, with upgrades and significant price target increases, suggesting a potential retest of all-time highs [9][10]

Core Viewpoint - Long-term investors prioritize underlying fundamentals over short-term quarterly results, and FedEx (FDX) demonstrates strong fundamentals supported by its operating model [1] Financial Performance - FDX's Q2 earnings showed mixed results, with adjusted earnings per share of $4.05 beating estimates but revenues of $21.9 billion falling short of the $22 billion consensus [14][16] - The freight unit experienced a significant revenue decline of 11% year-over-year, totaling $2.2 billion, due to fewer shipments and lower fuel surcharges [5] - FDX revised its fiscal 2025 earnings and revenue forecasts, now expecting flat revenues year-over-year and adjusted earnings per share between $19 and $20 [6] Strategic Initiatives - The board announced plans to spin off the FedEx Freight unit, creating two publicly traded companies, which is expected to allow FDX to focus on its core business [7][15] - The spin-off process is anticipated to take 18 months and aims to preserve operational synergies between the two entities [19] - FDX's DRIVE program is projected to yield $4 billion in savings by fiscal 2025 through cost-reduction initiatives [24] Shareholder Value - FDX has been active in rewarding shareholders, raising its quarterly dividend by 10% to $1.38 per share and repurchasing $1 billion in shares during the fiscal second quarter [21][17] - The stock has gained significantly post-announcement of the spin-off, reflecting investor confidence [9] Market Position - FDX's shares have outperformed its industry and rival UPS over the past year, driven by cost-cutting measures [25] - The company's current valuation is attractive, trading at lower levels than its industry average, with a Value Score of A [26]

BofA Securities analyst Ken Hoexter reiterated a Buy rating on FedEx Corporation FDX, raising the price forecast to $348 from $325.Yesterday, the company reported adjusted earnings of $4.05 per share, beating the $3.91 consensus estimate. Quarterly revenue came in at $22 billion, missing the $22.11 billion analyst consensus estimate.FedEx now expects approximately flat revenue year-over-year, versus its prior forecast of a low single-digit percentage increase.The analyst mentions that CEO Raj Subramaniam hi ...

FedEx Corporation (FDX) reported mixed second-quarter fiscal 2025 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues lagged the same.Quarterly earnings (excluding $1.02 from non-recurring items) of $4.05 per share beat the Zacks Consensus Estimate of $3.90 and improved 1.5% year over year. Revenues of $21.9 billion fell short of the Zacks Consensus Estimate of $22 billion and fell 0.8% from the year-ago fiscal quarter’s reported figure.Quarterly results were unfavorably affected ...