Should I Buy FedEx Corporation (FDX)? Finance YouTuber Analysis

The YouTuber favors FedEx over UPS due to its higher long-term dividend growth, stronger earnings growth, and lower valuation multiples (P/E, P/S). FedEx also has a more diversified customer base, avoiding reliance on large clients like Amazon, and a more agile, decentralized structure. The current dividend yield is historically high, and the stock is undervalued compared to its 10-year average.

“Ich halte FedEx für interessanter als UPS tatsächlich.”

The YouTuber expresses significant doubts about FedEx's management, especially given that a direct competitor (UPS) is navigating the current economic situation much better. Until these management concerns are resolved, he would not invest in the stock, suggesting that recent profit shortfalls might be due to management errors rather than solely economic headwinds.

“FedEx, da habe ich jetzt echt Zweifel tatsächlich am Management die dadurch auch genährt werden das schneidet Basel Service und direkte Konkurrent aus den USA viel besser mit der aktuellen Situation zurechtkommt bevor diese Zweifel nicht ausgeräumt sind würde ich nicht in die Aktie investieren”

The analyst suggests avoiding FedEx due to its current valuation, trading at 15.4 times earnings, which is well above its historical average. Despite expected earnings improvement from cost-cutting, the stock appears fairly priced at best with limited upside potential, especially considering the market is fully pricing in a soft landing.

“the stock is fairly priced at best and I think with limited upside potential now i'd probably avoid the stock at this point”

The YouTuber expresses concern about FedEx's valuation, noting that the stock has surged 31% year-to-date despite expectations of significant drops in earnings and sales. He believes the shares are relatively expensive and risk selling off if the economy enters a recession, making it less attractive at current levels.

“Shares are looking relatively expensive here and risk selling off if we do eventually fall into a recession that's not really why I'm interested in the stock here I think they are a little expensive for my taste right here but I'm watching this report though for just a read on the demand for services that demand for delivery consumer spending just an important indicator for the health of the economy”

The YouTuber suggests avoiding FedEx (FDX) due to expected lower earnings, mirroring weakness in the broader transportation segment. Its current valuation of 16x P/E is not particularly cheap, and the upside potential is deemed not worth the risk given the challenging environment for trucking and shipping companies.

“shares of FedEx not particularly cheap here either at 16 times on a price to earn his basis so I'm thinking the upside likely isn't worth the risk on this stock”

The analyst recommends avoiding FedEx at its current price due to its high debt levels (3.8x EBITDA, above the desired 3x), thin free cash flow after capex and debt servicing, and a forecasted 7% IRR which is considered too low for the current economic risk. He believes the stock is not well-priced and is over-leveraged, making it a risky opportunity despite its historical growth.

“I think this is indicating to you that this dock itself is fully valued especially on the cusp of what could be an economic slowdown this to me presents a very risky opportunity.”

The analyst states he would buy FedEx if its Enterprise Value to EBITDA multiple drops to 5 or 6 times, or if the stock price falls below $185 per share. At such levels, he believes the company would offer a much better risk-reward trade-off, making it an attractive long-term investment despite economic uncertainties.

“If it comes back down below let's say a hundred and eighty five dollars a share it becomes starts to become more attractive.”

The analyst suggests avoiding FedEx stock at its current price of $267, despite acknowledging its strong fundamentals like revenue growth, EBITDA growth, and low debt. The primary concern is that the stock is not 'well-priced' for the risk, offering only a 10% market return with significant downside if the economy slows down, especially after a 'monster year' in 2021. He recommends waiting for a lower market multiple or an economic downturn to buy it cheaper.

“for me I'm going to give it a meh because I'm not convinced we're going to collapse but also I'm not the return here isn't as high as I would like it”