FedEx Stock Just Hit a New 52-Week Low. Should You Buy the Dip in This Dividend Stock?
Logistics and parcel delivery drive global commerce, keeping goods moving amid rising e-commerce and shifting consumer habits. Wall Street has been treading on thin ice, rattled by a cooling industrial economy and lingering macroeconomic uncertainties. Business-to-business services are under pressure, corporate spending remains cautious, and analysts are slashing forecasts across sectors tied to economic output. In such an environment, even the biggest names aren't immune – and FedEx (FDX) is no exception.
The shipping titan just cut its outlook for the third consecutive quarter, citing weak demand and revenue stagnation. Investors took notice, sending FedEx stock to a new 52-week low, wiping out nearly one-fourth of its value in the year to date.
About FedEx Stock
Memphis-based FedEx (FDX) runs vast air and ground networks for shipping and logistics. Its market cap currently stands at $58.7 billion.
FedEx has been on a rough road, down 31% from its 52-week high of $313.84 and 23% on a YTD basis. A disappointing Q3 and weak guidance sent shares tumbling, prompting analysts to slash targets. But on March 24, a Jefferies upgrade fueled a 5.2% rebound, with the analyst citing overlooked cost transformation efforts.
Apart from just moving packages, FedEx is delivering value. Priced at 13.3 times earnings and 0.66 times sales, the stock trades at a discount compared to industry peers, offering a compelling entry point for long-term holders.
Long-term investors get more than an upside: They get a steady income. FedEx has paid dividends for over 20 years. At a 2.53% yield, the annual $5.52 per share dividend is backed by a conservative 23.9% payout ratio, ensuring sustainability and future growth. For those seeking a mix of value, stability, and dividends, FedEx is a first-class delivery.
FedEx's Mixed Q3 Results
FedEx delivered its fiscal third-quarter earnings report on March 20. Revenue climbed 2.3% year over year to $22.2 billion, outpacing Wall Street's estimate. However, while adjusted EPS grew 16.8% annually to $4.51, it still fell short of projections by 3%.
A key highlight was the 6.1% increase in U.S. domestic package revenue, fueled by rising average daily package volume. Yet, FedEx Freight faced headwinds. Declining shipment numbers and lighter loads dragged its revenue down, with the segment's operating income tumbling 23%.
FedEx's DRIVE cost-cutting initiative keep delivering, reinforcing profitability amid market shifts. With $2.2 billion in permanent cuts targeted for fiscal 2025, FedEx is set to sustain stronger margins in the years ahead. Plus, the December announcement to spin off FedEx Freight signaled a sharper operational focus and potential value unlock.
Shareholders saw direct benefits, with $500 million in buybacks this quarter and a projected $3.8 billion in total returns for this fiscal year. Financially, the company remains stable, reporting $5.1 billion in cash reserves as of Feb. 28.
Yet, management struck a cautious note for the rest of fiscal 2025. Revenue for the year is now expected to be flat to slightly down, a downward revision from previous guidance. Adjusted EPS is estimated to be between $18 and $18.60, down from the previous guidance range of $19 to $20, reflecting economic uncertainty, inflation, and trade policy impacts.
Analysts tracking FedEx anticipate the company's profit to climb 2.1% year-over-year to $18.18 per share in fiscal 2025, with further bottom-line growth of 12.7% to $20.49 per share in fiscal 2026.
What Do Analysts Expect for FedEx Stock?
Jefferies upgraded FDX with a $275 price target, seeing a strong risk-reward setup after the recent dip. Analyst Stephanie Moore argues that the market is too focused on macro fears while overlooking FedEx's aggressive cost-cutting moves.
With initiatives like DRIVE, FedEx is poised for EPS growth through fiscal 2027, regardless of revenue trends. The board's decision to spin off its LTL freight unit is another catalyst, unlocking shareholder value. Jefferies values FedEx's core operations at ~6.5x FY26 EBITDA, while Freight commands a premium ~12x multiple, reinforcing its long-term investment appeal.
FDX stock has a consensus 'Moderate Buy' rating overall. Of the 30 analysts covering the stock, 19 recommend a 'Strong Buy,' one suggests a 'Moderate Buy,' eight play it safe with a 'Hold' rating, and the remaining two analysts advise a 'Strong Sell.'
Meanwhile, the shipping stock's mean price target of $293.55 suggests that it could rally as much as 37% from its current price levels. The street-high of $354 implies potential upside of 66%.
FedEx isn't in crisis, but slashed guidance and stalled momentum raise concerns. As a key economic indicator, its struggles signal broader uncertainty, giving investors reason to stay vigilant on FDX stock.
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