Investopedia: FedEx Looks Like It's Coming And Going

Some stocks just seem to be loaded with "yeah, buts." Yeah, FedEx (NYSE:FDX) has emerged as one of the major global shippers, but the company struggles to earn an attractive rate of free cash flow. Yeah, FedEx is great at logistics and constantly looking for ways to improve yields, but the return on capital just is not there. Yeah, FedEx has incredible global growth opportunities, but the company is still vulnerable to weather, fuel and the same issues as any other transportation company. 

A Mixed Quarter But with a Positive Tone
Although FedEx guided this quarter down a few weeks, the news was not all bad. Revenue was up 11% for the fiscal third quarter, with Ground doing well (up 14%), Express doing well (up 11%), and Freight not doing so bad at all (up 8%). Volumes were alright, with Express and Ground up in the mid-single digits and shipment volume in Freight down 6%.

Profitability was more problematic. Overall, operating income dropped by 6% and the operating margin dropped by about 70 basis points to 4.1%. Operating performance was actually decent in Ground (the highest-margin business of the group by far), while Express weakened by two full points to 2.9% and Freight got less bad at negative 9.8%. (For more, see Zooming In On Net Operating Income.)

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