FedEx Corporation (FDX) is the world’s leading express delivery company. The firm offers a diverse range of transportation, e-commerce, and business services.
Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should know. (See FedEx stock charts on TipRanks)
Risk Factors
According to the new Tipranks Risk Factors tool, FedEx’s main risk category is Production, which accounts for 25% of the total 28 risks identified. The next two major risk factor contributors are Finance & Corporate and Legal & Regulatory, which stand at 21% each.
FedEx has added one new risk factor under the Production category. Under the Employment / Personnel sub-category, the company said, “Difficulties in attracting and retaining employees by FedEx and our contracted service providers and increases in labor and purchased transportation costs have materially adversely impacted our business and results of operations.”
FedEx highlighted that the company’s recent first-quarter 2022 earnings were affected by pandemic-related workforce unavailability. The firm had to face the additional costs of labor market limitations, which included higher wages, greater transportation costs, and reduced service levels. The company’s financial operations were harmed as a result of these issues.
On a brighter note, the overall sector average for the Finance & Corporate risk factor is 39.1%, higher than the average risks in that category for FedEx, which is 21.4%.
Financial Performance
Now let us dive into FedEx’s financial performance for the first quarter.
FedEx recorded $22 billion in revenue, up 14% year-over-year. However, the company posted adjusted earnings of $4.37 per share, down 10.3% year over year, and below analysts’ expectations of $5.00 per share.
During the quarter, the company incurred $450 million in additional labor expenses, which were partially offset by better package and freight yields and a positive net fuel effect.
Wall Street’s Take
On September 29, Berenberg Bank analyst William Fitzalan Howard reiterated a Buy rating on the stock and a price target of $330. This implies 50.5% upside potential to current levels.
FDX has a Strong Buy analyst consensus rating based on 17 Buys and 4 Holds. As for price targets, the average FDX price target is $307.80, reflecting 12-month upside potential of 40.4% from current levels.
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