Is FDX Stock a Smart Investment Option for the New Year?

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].