#De shaw macro trading free

Summary / conclusionįedEx is one of client's largest industrial holdings this year, in a tough tape, but there is likely more upside with FDX given DE Shaw's activism, although it won't likely happen suddenly. The valuation metric I put a lot of weight on for FDX is the price-to-sales metric for the transport giant: FDX's current price to sales metric today is 0.65x which makes the stock more of a buy than a sell here and then once it gets close to 1x sales or revenue, FDX becomes a better sale.Īgain, all this is contingent on what DE Shaw can unlock from the current Express, Ground and Freight operations.

#De shaw macro trading free

growth of 10% and 5% respectively, with FDX's revenue growth averaging about 8% growth per year over the last 10 years.ĪT $230 per share, FDX is trading at 9x average EPS from '23 through '25, with expected EPS growth averaging 7% for the next three fiscal years.Īt 8x cash-flow and 18x free cash flow, the stock looks reasonable, but FDX free cash flow can vary wildly, since small changes in revenue can lead to big changes in EPS and free cash generation. For Q1 '23, the current Street consensus is expecting $5.20 in EPS on $23.7 billion in revenue for expected year-over-year growth of 19% and 8%, respectively.įull year '23 estimates are $22.18 in EPS on $97.9 billion in revenue for expected yoy. When FedEx reports this coming Thursday night after the close, the Street consensus is expecting $6.87 in EPS on $24.5 billion in revenue for 'expected' year-over-year growth of 37% and 9% respectively. It's more comforting to see the higher revenue estimate revisions than it is disconcerting to see the pressure on forward EPS estimates right now since FDX, UPS, and the other carriers are still working off the incredible surge and then the slowdown in ecommerce and overnight deliveries. While FedEx has a fuel surcharge to protect margins for jet truck fuel price increases, the fact is it's likely hard to get a perfect hedge when gasoline has risen as much as it has the last two months. With recession talk in Europe and lately the US it's no surprise that analysts are in no rush to positively revise EPS or revenue estimates.

Looking at the 2nd table first, FDX's revenue revisions for 20 (this report Thursday night will be for fiscal Q4 '22 so fiscal 2022 is in the books, so to speak) are still higher, albeit at a modest pace. Looking at FDX's EPS and Revenue estimate revisionsįDX EPS estimate revisions (IBES data by Refinitiv )įDX revenue estimate revisions (IBES data by Refinitiv ) To really 'unlock' value at FedEx the business model ultimately has to change to become less capital-intensive, include better margins (typically anytime the operating margin hit 10% - 12% at FDX, it's time to sell the stock) and a more consistent, stable dividend - not to mention the lack of any meaningful share repurchase program, which could be an effective tool to return shareholder value given the cyclicality of the business. (Here's one article written on FDX's free cash flow topic.)Īnd therein lies the long-term issue for DE Shaw. However, recent investor activism has also catalyzed FDX stock: while on March 29th, 2022, Raj Subramanian was named new CEO, as Fred Smith has been elevated to Executive Chairman, DE Shaw took a 1% position in the stock, and added two independent directors to the FedEx Board, which ultimately led to the FedEx Board increasing the recent dividend to $1.15 per share from $0.75.įrankly the hike in FDX's dividend by the Board was surprising: FDX's free cash flow generation has been less than stellar for a while, which is usually the issue when you have a capital-intensive business like FedEx, where historically it's been 50% to 100% of cash-flow-from operations. The last article written on FedEx in mid-April '22 noted how cheap the stock was on a valuation basis, particularly the price-to-sales metric, which has traditionally been a good timing indicator for buying and selling the stock. Sundry Photography/iStock Editorial via Getty ImagesĪccording to Ycharts Fundamental Charts, FedEx ( NYSE: FDX) is down -10.8% YTD (which in this case matched the Morningstar data, which makes me more confident that it's accurate) beating the SP 500's YTD total return of -22.33% as of Friday, June 17th, 2022.