Is FedEx a Good Defensive Play?

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E = Equity to Debt Ratio Is Strong       

The debt-to-equity ratio for FedEx is stronger than the industry average of 0.50.

Debt-To-Equity

Cash

Long-Term Debt

FDX

0.14

$3.37 Billion

$2.24 Billion

UPS

2.73

$7.92 Billion

$12.92 Billion

EXPD

0.00

$1.26 Billion

$0

 

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T = Technicals Have Weakened    

FedEx has performed well over the past year, but the past month has been disappointing. This is directly related to earnings. The question now is if the bar has been set low enough to leave room for upside potential or if this is the beginning of a longer downtrend.

1 Month

Year-To-Date

1 Year

3 Year

FDX

-9.14%

6.93%

13.77%

9.29%

UPS

0.15%

15.55%

11.30%

43.33%

EXPD

-4.24%

-6.32%

-16.55%

3.13%

 

At $97.96, FedEx is trading below its 50-day SMA, but above its 100-day SMA and 200-day SMA.

50-Day   SMA

103.30

100-Day   SMA

97.93

200-Day   SMA

93.61

 

E = Earnings Have Been Steady                     

Revenue and earnings have consistently improved over the past few years. However, we already known that EPS is likely to decline in 2013.

2008

2009

2010

2011

2012

Revenue   ($)in   billions

37.95

35.50

34.73

39.30

42.68

Diluted   EPS ($)

3.60

0.31

3.76

4.57

6.41

 

When we look at the last quarter on a year-over-year basis, we see an increase in revenue and a decline in earnings. Revenue and earnings have also declined on a sequential basis. This isn’t necessarily a red flag, but it’s certainly not a positive.

12/2011

3/2012

6/2012

9/2012

12/2012

Revenue   ($)in   billions

10.56

11.01

10.79

11.11

10.95

Diluted   EPS ($)

1.65

1.73

1.45

1.39

1.13

 

Now let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

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