Revenue Growth: In 2008, FedEx reported revenue of $38 billion; in 2012 the company reported revenue of $42. 7 billion, representing a year over year annual growth rate of 2. 96%, and while this may not seem like an explosive number, the caliber of growth is solid and expected to accelerate into the future, with 2015 revenues reaching nearly $49 billion. Established Distribution System: The company possesses a massive fleet of airplanes, trucks, locations, and employees, and is distinctly established and has the capability of transporting thousands of packages every day.
Dividend: The company currently pays out a quarterly dividend of $0. 14, which annualized puts the dividend as yielding 0. 62%. Reasonable Valuation: The company carries a price to earnings ratio of 14. 02, which by nearly all standards is a relatively reasonable valuation. Institutional Vote of Confidence: 78% of shares outstanding are held by institutional investors, displaying the huge amount of confidence long-term and big-money investors have in the company and its future.
Money on the Balance Sheets: The company currently has $1. 176 billion in cash or cash equivalents on its balance sheet, a large cushion for times of economic downfall. Weaknesses: Relative Small Size: Compared to UPS, FedEx is considered a rather small company, and in an industry in which consumers have to put their trust in a company to get their product to a place on time, consumers often turn to the largest company with the best reputation. Margins: FedEx’s net profit margin is only 4.
The Essay on Dividend Growth Model
1. Dividend Growth ModelThe basic assumption in the Dividend Growth Model is that the dividend is expected to grow at a constant rate. That this growth rate will not change for the duration of the evaluated period. As a result, this may skew the resultant for companies that are experiencing rapid growth. The Dividend Growth Model is better suited for those stable companies that fit the model. ...
76%, leaving little room for the company to swallow rising input costs. Declining cash flow per Share: In 2012, the company possessed $17. 00 of cash flow per share, however in 2013 the average analysts estimates show the cash flow per share only reaching $14. 60, representing a 14. 12% year over year decline. Opportunities: Acquisitions: During the 2012 year FedEx has acquired Rapidao Cometa, Opek Sp. , and TATEX; and further acquisitions are a strong possibility into the future, as FedEx has the capability and money to do so.
Holiday Season: A large portion of FedEx’s business is derived from the holiday season rush, and it is crucial that they execute perfectly to take full advantage of this opportunity, as they are expecting an 13% increase in shipments, and have prepared by hiring their usual wave of seasonal workers. Gaining Market Share: There is fierce competition in the shipping industry, especially around the holiday season, and FedEx has been running a fierce marketing campaign recently to try to capture crucial market share, which would significantly help business.
Converting Fleet to Natural Gas: Companies are developing trucks and cars that are capable of running on natural gas, and companies such as Waste Management have already begun to convert their fleets to be capable of running on natural gas, which is substantially cheaper than running on oil. Threats: Competition: The shipping industry is a highly competitive landscape which has several massive companies operating in it, and the competition to offer the best quality for the lowest price leads to margin contraction.
Rising Oil Prices: FedEx’s average cost per gallon of jet fuel or oil has more than doubled over the past five years, and according to the wide majority of analysts, oil and jet fuel prices are only set to rise further into the future, squeezing FedEx’s margins as they face the decision of swallowing the pain or passing it onto their customers. Weather Uncertainty: Like we have seen most recently with Hurricane Sandy, natural disasters can bring business to a complete stand-still, leaving FedEx with no capabilities to fly their planes and get their packages to the right place at the right time. Competitors:
The Term Paper on Share Price Cable Wireless Company
Introduction This report follows the financial life of BT and Cable and Wireless over a set period. The start date was 21 st October 1999 and the finish data was 3 rd February 2000. In 1984 BT became a public limited company, 51 % of its shares were sold to the public, this was a total of 3012 million shares. The purchase price was 130 pence; the offer was 3.2 times over subscribed. To this day BT ...
Major publically-traded competitors of FedEx include United Parcel Service (NYSE: UPS)and J. B. Hunt Transport Services (NASDAQ: JBHT).
UPS is much larger than FedEx and competes directly with FedEx as they offer similar if not identical services. UPS pays out a relatively large dividend, however carries a price to earnings ratio around 20. J. B. Hunt is also a transportation company, however is more focused on transporting large bulks of packages, compared to delivering directly to the customer. J. B. Hunt carries a price to earnings ratio north of 20, however is fueled by faster paced growth.
