Transportation stocks usually lead the market out of a recession and FedEx (NYSE:FDX) has acted very toppy for the past few months. This probably means bad news for the market but may provide an opportunity for investors. Just the trailing valuation metrics suggest that the stock is fairly valued while analysts and the forward P/E valuations suggest that the stock is undervalued. As the jobs figures keep improving, another stock market leg higher should take FedEx higher. Below is an in depth look at the valuation metrics and the stock chart.
Valuation: FedEx's trailing 5 year valuation metrics suggest that the stock is fairly valued as there is a mixed message about the valuation metrics compared to their 5 year averages. FedEx's current P/B ratio is 1.7 and it has averaged 1.8 over the past 5 years with a high of 2.7 and low of 0.9. FedEx's current P/S ratio is 0.7 and it has averaged 0.7 over the past 5 years with a high of 1 and low of 0.4. FedEx's current P/E ratio is 13.7 and it has averaged 19 over the past 5 years with a high of 25.5 and low of 13.9.
Price Target: The consensus price target for the analysts who follow FedEx is $107. That is upside of 22% from today's stock price of $87.8 and suggests that the stock has some upside from here, considering FDX's market cap.
Forward Valuation: FedEx is currently trading at about $88 a share with analysts expecting EPS of $7.44 next year, an earnings increase of 15% y/y, for a forward P/E ratio of 11.8. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. United Parcel Service (NYSE:UPS) is currently trading at about $76 a share with analysts expecting EPS of $5.53 next year, an earnings increase of 14% y/y, for a forward P/E ratio of 13.8. C.H. Robinson Worldwide (NASDAQ:CHRW) is currently trading at about $61 a share with analysts expecting EPS of $3.29 next year, an earnings increase of 14% y/y, for a forward P/E ratio of 18.5. Expeditors International (NASDAQ:EXPD) is currently trading at about $39 a share with analysts expecting EPS of $2.13 next year, an earnings increase of 16% y/y, for a forward P/E ratio of 18.2. The mean forward P/E of FedEx's competitors is 16.8 which suggests that FedEx is undervalued relative to its publicly traded competitors.
Earnings Estimates: FedEx has beat EPS estimates every time in the past 4 quarters. The company's EPS figures have come in between 1 cents and 20 cents from consensus estimates or about 0.7% to 14.8% from analyst estimates. The company has reported earnings that have differed from analyst estimates by a wide margin which suggests that the stock may experience upside from earnings surprises.
Price Action: FedEx is down 5.8% over the past year, underperforming the S&P 500, which is up 2.5%. Looking at the technicals, the stock is currently below its 50 day moving average, which sits at $90.34 and above its 200 day moving average, which sits at $83.90.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.