FedEx has consistently generated strong returns through dividend growth, with an average annual total return of 10.2% from 1973 to 2023. Despite facing industry headwinds, the company has navigated these challenges through cost-saving measures, including its DRIVE initiative and Network 2.0 overhaul. As a result, FedEx’s operating income has grown, and margins have expanded during the recent revenue decline. The company’s financial position remains solid, with an interest coverage ratio of 14.6 and a moderate debt-to-capital ratio. Shares of FedEx appear undervalued at current levels, with a fair value estimate of $303 per share. This undervaluation represents an opportunity for investors to capitalize on the company’s potential for long-term growth and attractive dividend yield.
