FedEx and the NRA
Recently, parcel delivery giants FedEx (FDX) and United Parcel Service (UPS) have come under fire for alleged ties with the National Rifle Association. It became a hot topic after the February 14, 2018, mass shooting at a Florida school, which claimed 17 lives. According to Bloomberg, “Since Sunday, the #BoycottFedEx hashtag has been included in more than 700 posts on Twitter, including one by student David Hogg that has been shared more than 14,000 times.”
FedEx stock price performance
On March 6, 2018, FedEx stock closed at $243.04. Its 52-week high was $274.60, and its 52-week low was $182.89. The current level is near the 52-week high. The stock has a one-year target price of $284. Based on the March 6 closing price, that translates to a return potential of 16.4%. In the last year, FDX stock rose 24.6%. Let’s compare that to its peers:
- United Parcel Service (UPS): rose 2.5%
- Old Dominion Freight Lines (ODFL): rose 33.4%
- Saia (SAIA): rose 50.8%
- XPO Logistics (XPO): rose 10.2%
- YRC Worldwide (YRCW): fell 25.8%
- ArcBest (ARCB): rose 13.8%
The SPDR S&P Transportation ETF (XTN), which invests 24.1% in trucking companies, rose 14.9% during the same period.
Management’s outlook for fiscal 2018
FedEx raised its forecast for fiscal 2018 as a result of better revenue and solid demand trends. It anticipates enhanced financial results in the second half of fiscal 2018. Its earnings forecast—before year-end, mark-to-market pension accounting adjustments and excluding expenses related to TNT Express—is $12.70–$13.30 per diluted share for fiscal 2018. The company assumes a positive impact from the new US tax laws, moderate economic growth, and continued recovery from the cyberattack.
Given FDX’s scale of operations, its earnings growth is possible due to the positive impact of the Tax Cuts and Jobs Act. With that in mind, FedEx stock could have an upward momentum in the coming quarters.