Wednesday, June 19, 2013

Investopedia: FedEx Not Particularly Expensive, But Analysts Still Too Positive

Although I have tremendous respect for the business that FedEx (NYSE:FDX) has built, the same cannot be said of my opinion of most analysts' models and valuations for this company. FedEx has long struggled to deliver good free cash flow (FCF) generation, and although I think the company's new efficiency plans will produce better results, there's a gulf between “better” and “good”.

That said, FedEx shares have underperformed the market for about three years running and now don't seem particularly expensive. While I would have some concern that sell-side analysts are still setting too high a bar for the company (sowing the seeds for future disappointment), there's at least a buy case to be made today.

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