FedEx Corporation (FDX)

Conclusion

FedEx Corporation provides package and freight transportation, e-commerce and business services in the United States and internationally, through its Express U.S. Domestic and Express International segments. At a share price of 318.84 USD on 2026-11-09, the company has a market capitalisation of 74.7 billion USD.

The verdict is fair. The fair value band runs from 261.88 to 392.82 USD, with a midpoint of 327.35 USD and a margin of safety of 2.7% at the current price. The discounted cash flow gives 358.64 USD per share at a discount rate of 11.44%, and the fair value from historical multiples is 296.06 USD. Price-to-earnings of 19.1 sits above its ten-year median of 16.4, while price-to-free-cash-flow of 13.6 sits below its median of 18.9. The reverse discounted cash flow implies growth of 5.1%, against revenue growth of 2.5% a year delivered over five years.

What holds the case up is interest coverage of 11.4, free cash flow conversion of 140.6% over the last twelve months, and a five-year share count change of -2.3% a year from buybacks. What would break it is return on invested capital of 7.3% against a weighted average cost of capital of 9.02%, five-year EPS growth of -1.0% a year, and a 12.3% cut to current-year earnings estimates over the last ninety days.

Financial health

Financial strength is green, held up by interest coverage of 11.4 and a current ratio of 1.33, while net debt to EBITDA of 2.36 and debt to equity of 0.99 keep the picture from being stronger. The quick ratio is 1.17. Net debt to EBITDA is the metric to watch as earnings are under pressure. The Altman Z-score is 2.82, which falls in the grey zone. The Altman model was designed for manufacturers, so its reading is only indicative for a logistics business. Insolvency risk: low, about 0.55% by the estimate of the Ohlson model over one to two years, based on figures as of 2026-05-31.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is strong at 140.6% over the last twelve months, though the five-year average is 82.0%. The accrual ratio of -4.8% points to cash earnings running ahead of reported profit. Stock-based compensation is negligible at 0.05% of revenue, leaving free cash flow after it at 5.44 billion USD. The Piotroski score is 6 out of 9. The Beneish M-score is not available. The company beat earnings estimates in seven of the last eight quarters, with an average surprise of 10.5%. However, analysts have cut the current-year estimate by 12.3% over ninety days, with six downgrades against three upgrades in the last thirty days.

Profitability

Profitability is yellow. Margins sit just below their ten-year medians: gross margin is 18.95% against a median of 21.56%, operating margin 6.45% against 6.98%, and net margin 4.09% against 4.67%. Return on invested capital is 7.3%, below the weighted average cost of capital of 9.02%, which gives a gap of -1.72%. The five-year median return on invested capital is 8.05%. Return on equity of 11.28% is flattered by leverage: the equity multiplier is 3.13, while asset turnover is 0.96 and the net margin is 4.68%. Operating margin stability is 1.03.

Growth

Growth is yellow. Revenue compound growth is 1.7% over three years and 2.5% over five years. Revenue grew in six of the last ten years. Earnings per share grew 6.1% a year over three years but fell 1.0% a year over five years. Free cash flow per share grew 27.6% a year over three years and 6.2% over five. Analysts expect earnings growth of 13.7% next year, though that estimate has been revised down by 13.5% over ninety days. A ten-year revenue growth figure is not available.

Valuation

Valuation is yellow, with a verdict of fair. Price-to-earnings of 19.1 is a 16.6% premium to its ten-year median of 16.4. Enterprise value to EBITDA of 10.0 is a 5.8% premium to its median of 9.5. Price-to-free-cash-flow of 13.6 is a 27.9% discount to its median of 18.9, and price-to-book of 2.16 is a 13.6% discount to its median of 2.50. The discounted cash flow gives 358.64 USD per share at a discount rate of 11.44%, with a growth assumption of 8.1% for the first stage and 2.5% in perpetuity. About 46.7% of that value comes from the terminal value. The reverse discounted cash flow implies growth of 5.1%, against revenue growth of 2.5% and free cash flow per share growth of 6.2% over five years. The dividend yield is 1.77%, with a payout of 24.1% of free cash flow. The fair value band is built on fixed assumptions and is not a price target.

Risks

The main risk is that returns stay below the cost of capital: a return on invested capital of 7.3% against 9.02% means each new dollar invested earns less than it costs. Five-year EPS decline and falling estimates would weaken the case if they persist. Net debt to EBITDA of 2.36 limits flexibility if earnings fall further. The Altman Z-score of 2.82 offers only a grey-zone reading for this business. Values not available include the Beneish M-score and ten-year revenue growth. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing pressure and the mix of growth cannot be assessed.