Opinions Jim Cramer - Mad Money
FedExFDXBUYDec 20, 2023
Jim Cramer - Mad MoneyStock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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From last-mid-October to mid-February, transports rallied 25% on hopes of better interest rates and better volumes. Then, the Iran war and oil spike came out of nowhere and this sector has fallen 12%. FedEx is more than doubled since last April. It just reported a strong beat and forecast through 2029. It will spin off its freight business which could unlock value. Revenues and EPS beat. Operating margin also surprised well. Still has room to run as it trades at only 16x PE for 2027.
Last night, they reported a surprisingly good quarter, so shares jumped 2.3%. It has struggled since summer 2024 and especially during the tariff spring of 2025. Is still -17.6% this year and has been downgraded recently. Total revenue is +3% YOY, driven by core FedEx express business. Adjusted EPS easily beat and issued a positive full-year forecast. They raised revenue growth outlook. Cutbacks, like removing stations and pick-up times, (Network 2.0) is cutting costs without angering customers. Also, are making their European business more efficiency with more productivity. He sees more upside, though is a little cautious due to tariffs. FedEx has done very well navigating this tricky economy. Trades at under 13x PE, cheap. Pays a safe 2.5% dividend.
He sold it at $295 recently. Loves the company, but earnings revisions came down. He bought at $262. He may re-buy it if the price and valuation are right. FedEx is a dominant player and the management team proves they can execute. The founder family still owns a lot of shares, and such families don't make crazy decision to preserve their stake. Also, cost savings and a huge share buyback are plusses. Also, they have fewer unionized employees than UPS.
Was down an ugly 12% today after an earnings miss. Over-reaction? Earnings slightly missed. Adjusted operating income grew, though still came in a tad light. Saw 25.5% earnings growth YOY, but EPS still missed the street's estimate. The company cut their full-year forecast. The problems are rooted into their Express business, their largest, which saw revenues -6% YOY and operating income -49% YOY. FedEx ground is solid, and Freight continues to recover. In the US, some businesses moved from Express to the cheaper Ground service. Make sense. Also, there's less international air freight as competing rates have flatlined. Because oil prices are down this year, their fuel surcharges (and revenues) are lower. Also, they saw less business from the US Post Office than expected. Also, Wall St. priced in savings of the long-term Drive transformation plan too early. Yes, these problems are real, but are not enough to give up on FedEx. He believes the CEO who says that many of its problems are transitory (i.e. the post office deal ends next year and the shift to Ground sounds like a holiday season thing). Earnings took a hit, yes, but didn't evaporate as they would have a year ago. In fact, numbers are resilient and show how successful they've been in cutting costs. Costs are much better than in ages. Amazon: their parcel volume now surpasses FedEx and UPS, something that neither the CEO nor analysts mentioned. If Amazon keeps taking market share, then this will be a major problem for FedEx. Again, he feels FedEx's problems are temporary, and it trades under 14x PE. It could be in the penalty box for a quarter, but FedEx will get cheaper and shares fall lower.