FedEx Corporation (NYSE:FDX): Immense Growth Potential?

Simply Wall St

After FedEx Corporation's (NYSE:FDX) earnings announcement in February 2019, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 11% next year compared with the higher past 5-year average growth rate of 22%. Presently, with latest-twelve-month earnings at US$4.6b, we should see this growing to US$5.1b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for FedEx in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for FedEx

Exciting times ahead?

Longer term expectations from the 23 analysts covering FDX’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of FDX's earnings growth over these next few years.

NYSE:FDX Past and Future Earnings, April 22nd 2019

This results in an annual growth rate of 12% based on the most recent earnings level of US$4.6b to the final forecast of US$6.1b by 2022. This leads to an EPS of $19.42 in the final year of projections relative to the current EPS of $17.1. With a current profit margin of 7.0%, this movement will result in a margin of 8.1% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For FedEx, there are three key factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is FedEx worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FedEx is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FedEx? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.