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How Is FedEx Valued Compared to Its Peers?

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Forward PE ratio

We covered FedEx’s (FDX) fiscal 2Q16 results earlier in this series. In this part, we’ll discuss the company’s valuation compared to its peers.

We’ll use the forward PE (price-to-earnings) multiple to gauge FedEx’s valuation. The forward PE ratio is the stock’s current price divided by the next 12-month earnings estimate. A forward PE ratio that is lower than the current PE ratio indicates an expected increase in earnings. This ratio helps us understand a company’s valuation with a focus on future growth rather than past performance.

Currently, FedEx’s (FDX) forward PE ratio stands at 13.53x. Its current PE ratio is 34.8.

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Comparison with peers

In the above chart, FedEx (FDX) is compared to its peer United Parcel Services (UPS), its biggest and closest competitor. C.H. Robinson Worldwide (CHRW), Expeditors International (EXPD), Hub Group (HUBG), and Forward Air (FWRD) are logistics providers that offer indirect competition to UPS.

  • FedEx has the lowest valuation compared to its peers.
  • UPS is currently valued at a forward PE ratio of 17.89x.
  • Air Transport Services (ATSG) had a forward PE multiple of 13.5x during the same period.
  • Logistics providers C.H. Robinson Worldwide (CHRW) and Expeditors International (EXPD) were valued at 17.4x and 18.8x, respectively, during the same period.

FedEx forms the largest holding of 12% in the iShares Transportation Average ETF (IYT).

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