Should You Buy FDX Stock Now After Recent Dividend Hike?

Core Insights - FedEx Corporation has announced a 5.1% increase in its quarterly dividend, raising it to $1.45 per share, marking the fifth consecutive year of dividend hikes [1][9] - The company has executed $2.52 billion in share repurchases in the first nine months of fiscal 2025, surpassing the total for the entire fiscal year 2024 [5][9] - FedEx's stock is currently trading at a low price/sales ratio of 0.6, indicating potential undervaluation compared to the sector average of 0.96 [7][8] Dividend and Shareholder Returns - The quarterly dividend will be paid on July 8, 2025, to shareholders of record as of June 23, 2025 [2] - Dividends have increased significantly from $793 million in 2022 to $1.26 billion in 2024, with $1.01 billion already distributed in the first three quarters of fiscal 2025 [3] Capital Allocation Strategy - FedEx's aggressive capital allocation strategy aims to enhance shareholder returns through both dividends and share repurchases [3][5] - The company’s buyback program suggests management views its stock as undervalued and aims to improve per-share metrics [5] Market Position and Performance - The recent multi-year delivery deal with Amazon is expected to provide a significant boost to FedEx's domestic market presence and operational efficiency [10][11] - Despite the positive impact of the Amazon deal, FedEx shares have faced declines, although they have outperformed rival UPS over the past year [12] Financial Outlook and Challenges - FedEx is experiencing weak EPS forecasts and rising costs due to macroeconomic pressures, which are affecting its Freight segment [9][15] - The company has issued a lackluster revenue forecast for fiscal 2025, projecting flat or slightly declining revenues year over year [16] - Operating expenses increased by 2% year-over-year in Q3 fiscal 2025, driven by a 57% rise in business optimization costs [17] Investor Sentiment - Analysts have revised earnings estimates downward due to ongoing challenges, leading to negative sentiment surrounding FedEx stock [19][20] - The combination of weak current performance and uncertain future prospects raises concerns for potential investors [20]