Intrinsic value of FedEx - FDX

Previous Close

$220.00

  Intrinsic Value

$989.38

stock screener

  Rating & Target

str. buy

+350%

  Value-price divergence*

-62%

Previous close

$220.00

 
Intrinsic value

$989.38

 
Up/down potential

+350%

 
Rating

str. buy

 
Value-price divergence*

-62%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of FDX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 59.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  19.76
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
Revenue, $m
  60,319
  73,107
  87,421
  103,263
  120,622
  139,473
  159,789
  181,535
  204,678
  229,185
  255,029
  282,186
  310,641
  340,386
  371,421
  403,758
  437,412
  472,414
  508,798
  546,609
  585,901
  626,736
  669,182
  713,317
  759,225
  806,997
  856,732
  908,536
  962,521
  1,018,808
  1,077,522
Variable operating expenses, $m
 
  58,553
  69,878
  82,411
  96,144
  111,058
  127,131
  144,335
  162,644
  182,033
  202,479
  223,248
  245,760
  269,293
  293,846
  319,429
  346,054
  373,745
  402,530
  432,444
  463,530
  495,836
  529,417
  564,334
  600,653
  638,447
  677,795
  718,779
  761,489
  806,019
  852,471
Fixed operating expenses, $m
 
  7,186
  7,366
  7,550
  7,739
  7,932
  8,131
  8,334
  8,542
  8,756
  8,975
  9,199
  9,429
  9,665
  9,906
  10,154
  10,408
  10,668
  10,935
  11,208
  11,488
  11,776
  12,070
  12,372
  12,681
  12,998
  13,323
  13,656
  13,997
  14,347
  14,706
Total operating expenses, $m
  55,282
  65,739
  77,244
  89,961
  103,883
  118,990
  135,262
  152,669
  171,186
  190,789
  211,454
  232,447
  255,189
  278,958
  303,752
  329,583
  356,462
  384,413
  413,465
  443,652
  475,018
  507,612
  541,487
  576,706
  613,334
  651,445
  691,118
  732,435
  775,486
  820,366
  867,177
Operating income, $m
  5,037
  7,367
  10,177
  13,302
  16,739
  20,483
  24,528
  28,866
  33,492
  38,397
  43,575
  49,738
  55,451
  61,428
  67,669
  74,175
  80,950
  88,000
  95,333
  102,957
  110,883
  119,125
  127,696
  136,612
  145,891
  155,552
  165,614
  176,101
  187,035
  198,441
  210,346
EBITDA, $m
  8,032
  10,932
  14,300
  18,042
  22,155
  26,634
  31,470
  36,656
  42,184
  48,044
  54,230
  60,736
  67,558
  74,694
  82,144
  89,910
  97,997
  106,411
  115,162
  124,259
  133,717
  143,550
  153,775
  164,411
  175,479
  187,002
  199,003
  211,508
  224,546
  238,146
  252,339
Interest expense (income), $m
  484
  522
  763
  1,032
  1,330
  1,657
  2,012
  2,395
  2,805
  3,240
  3,702
  4,189
  4,700
  5,236
  5,796
  6,381
  6,989
  7,623
  8,282
  8,968
  9,680
  10,420
  11,189
  11,988
  12,819
  13,684
  14,583
  15,520
  16,496
  17,512
  18,572
Earnings before tax, $m
  4,579
  6,846
  9,415
  12,270
  15,408
  18,825
  22,515
  26,471
  30,687
  35,156
  39,873
  45,550
  50,751
  56,192
  61,873
  67,794
  73,961
  80,377
  87,050
  93,989
  101,204
  108,705
  116,507
  124,624
  133,072
  141,868
  151,031
  160,581
  170,539
  180,929
  191,773
Tax expense, $m
  1,582
  1,848
  2,542
  3,313
  4,160
  5,083
  6,079
  7,147
  8,285
  9,492
  10,766
  12,298
  13,703
  15,172
  16,706
  18,304
  19,969
  21,702
  23,504
  25,377
  27,325
  29,350
  31,457
  33,648
  35,929
  38,304
  40,778
  43,357
  46,046
  48,851
  51,779
Net income, $m
  2,997
  4,997
  6,873
  8,957
  11,248
  13,743
  16,436
  19,324
  22,401
  25,664
  29,108
  33,251
  37,049
  41,020
  45,167
  49,490
  53,991
  58,675
  63,547
  68,612
  73,879
  79,355
  85,050
  90,975
  97,142
  103,564
  110,253
  117,224
  124,494
  132,078
  139,995

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,969
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  48,552
  54,033
  64,613
  76,322
  89,151
  103,085
  118,100
  134,172
  151,277
  169,391
  188,491
  208,563
  229,594
  251,578
  274,517
  298,416
  323,291
  349,160
  376,051
  403,998
  433,039
  463,220
  494,592
  527,211
  561,142
  596,450
  633,209
  671,497
  711,398
  752,999
  796,395
Adjusted assets (=assets-cash), $m
  44,583
  54,033
  64,613
  76,322
  89,151
  103,085
  118,100
  134,172
  151,277
  169,391
  188,491
  208,563
  229,594
  251,578
  274,517
  298,416
  323,291
  349,160
  376,051
  403,998
  433,039
  463,220
  494,592
  527,211
  561,142
  596,450
  633,209
  671,497
  711,398
  752,999
  796,395
Revenue / Adjusted assets
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
  1.353
Average production assets, $m
  25,133
  30,485
  36,455
  43,061
  50,299
  58,160
  66,632
  75,700
  85,351
  95,570
  106,347
  117,671
  129,537
  141,941
  154,883
  168,367
  182,401
  196,997
  212,169
  227,936
  244,321
  261,349
  279,049
  297,453
  316,597
  336,518
  357,257
  378,859
  401,371
  424,843
  449,327
Working capital, $m
  4,710
  950
  1,136
  1,342
  1,568
  1,813
  2,077
  2,360
  2,661
  2,979
  3,315
  3,668
  4,038
  4,425
  4,828
  5,249
  5,686
  6,141
  6,614
  7,106
  7,617
  8,148
  8,699
  9,273
  9,870
  10,491
  11,138
  11,811
  12,513
  13,245
  14,008
Total debt, $m
  14,931
  21,788
  29,490
  38,014
  47,354
  57,498
  68,429
  80,130
  92,582
  105,768
  119,674
  134,286
  149,596
  165,601
  182,300
  199,699
  217,808
  236,641
  256,217
  276,562
  297,704
  319,676
  342,515
  366,262
  390,963
  416,668
  443,428
  471,302
  500,350
  530,635
  562,227
Total liabilities, $m
  32,479
  39,336
  47,038
  55,562
  64,902
  75,046
  85,977
  97,678
  110,130
  123,316
  137,222
  151,834
  167,144
  183,149
  199,848
  217,247
  235,356
  254,189
  273,765
  294,110
  315,252
  337,224
  360,063
  383,810
  408,511
  434,216
  460,976
  488,850
  517,898
  548,183
  579,775
Total equity, $m
  16,073
  14,697
  17,575
  20,760
  24,249
  28,039
  32,123
  36,495
  41,147
  46,074
  51,270
  56,729
  62,450
  68,429
  74,669
  81,169
  87,935
  94,972
  102,286
  109,887
  117,787
  125,996
  134,529
  143,402
  152,631
  162,234
  172,233
  182,647
  193,500
  204,816
  216,619
Total liabilities and equity, $m
  48,552
  54,033
  64,613
  76,322
  89,151
  103,085
  118,100
  134,173
  151,277
  169,390
  188,492
  208,563
  229,594
  251,578
  274,517
  298,416
  323,291
  349,161
  376,051
  403,997
  433,039
  463,220
  494,592
  527,212
  561,142
  596,450
  633,209
  671,497
  711,398
  752,999
  796,394
Debt-to-equity ratio
  0.929
  1.480
  1.680
  1.830
  1.950
  2.050
  2.130
  2.200
  2.250
  2.300
  2.330
  2.370
  2.400
  2.420
  2.440
  2.460
  2.480
  2.490
  2.500
  2.520
  2.530
  2.540
  2.550
  2.550
  2.560
  2.570
  2.570
  2.580
  2.590
  2.590
  2.600
Adjusted equity ratio
  0.271
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272
  0.272

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,997
  4,997
  6,873
  8,957
  11,248
  13,743
  16,436
  19,324
  22,401
  25,664
  29,108
  33,251
  37,049
  41,020
  45,167
  49,490
  53,991
  58,675
  63,547
  68,612
  73,879
  79,355
  85,050
  90,975
  97,142
  103,564
  110,253
  117,224
  124,494
  132,078
  139,995
Depreciation, amort., depletion, $m
  2,995
  3,565
  4,122
  4,740
  5,416
  6,151
  6,943
  7,790
  8,692
  9,647
  10,654
  10,997
  12,106
  13,265
  14,475
  15,735
  17,047
  18,411
  19,829
  21,302
  22,834
  24,425
  26,079
  27,799
  29,588
  31,450
  33,389
  35,407
  37,511
  39,705
  41,993
Funds from operations, $m
  2,728
  8,562
  10,995
  13,697
  16,664
  19,893
  23,379
  27,114
  31,094
  35,311
  39,762
  44,249
  49,155
  54,286
  59,642
  65,225
  71,038
  77,086
  83,376
  89,915
  96,712
  103,780
  111,129
  118,775
  126,731
  135,014
  143,641
  152,632
  162,005
  171,783
  181,988
Change in working capital, $m
  -2,202
  166
  186
  206
  226
  245
  264
  283
  301
  319
  336
  353
  370
  387
  403
  420
  438
  455
  473
  492
  511
  531
  552
  574
  597
  621
  647
  673
  702
  732
  763
Cash from operations, $m
  4,930
  8,396
  10,809
  13,491
  16,439
  19,648
  23,115
  26,831
  30,793
  34,993
  39,426
  43,896
  48,785
  53,899
  59,239
  64,805
  70,601
  76,631
  82,903
  89,423
  96,201
  103,249
  110,578
  118,201
  126,134
  134,393
  142,995
  151,958
  161,303
  171,051
  181,224
Maintenance CAPEX, $m
  0
  -2,349
  -2,849
  -3,407
  -4,024
  -4,701
  -5,436
  -6,227
  -7,075
  -7,977
  -8,932
  -9,939
  -10,997
  -12,106
  -13,265
  -14,475
  -15,735
  -17,047
  -18,411
  -19,829
  -21,302
  -22,834
  -24,425
  -26,079
  -27,799
  -29,588
  -31,450
  -33,389
  -35,407
  -37,511
  -39,705
New CAPEX, $m
  -5,116
  -5,353
  -5,969
  -6,606
  -7,238
  -7,861
  -8,472
  -9,068
  -9,651
  -10,220
  -10,777
  -11,324
  -11,866
  -12,404
  -12,942
  -13,484
  -14,034
  -14,596
  -15,172
  -15,767
  -16,385
  -17,028
  -17,700
  -18,404
  -19,143
  -19,921
  -20,740
  -21,602
  -22,512
  -23,471
  -24,484
Cash from investing activities, $m
  -4,981
  -7,702
  -8,818
  -10,013
  -11,262
  -12,562
  -13,908
  -15,295
  -16,726
  -18,197
  -19,709
  -21,263
  -22,863
  -24,510
  -26,207
  -27,959
  -29,769
  -31,643
  -33,583
  -35,596
  -37,687
  -39,862
  -42,125
  -44,483
  -46,942
  -49,509
  -52,190
  -54,991
  -57,919
  -60,982
  -64,189
Free cash flow, $m
  -51
  694
  1,991
  3,478
  5,176
  7,086
  9,207
  11,536
  14,067
  16,796
  19,717
  22,632
  25,922
  29,389
  33,031
  36,846
  40,831
  44,989
  49,320
  53,827
  58,514
  63,387
  68,452
  73,718
  79,191
  84,883
  90,805
  96,967
  103,384
  110,068
  117,036
Issuance/(repayment) of debt, $m
  1,108
  6,879
  7,702
  8,524
  9,340
  10,143
  10,931
  11,701
  12,452
  13,186
  13,905
  14,612
  15,311
  16,005
  16,699
  17,399
  18,109
  18,833
  19,577
  20,345
  21,142
  21,972
  22,839
  23,747
  24,701
  25,704
  26,761
  27,874
  29,048
  30,286
  31,592
Issuance/(repurchase) of shares, $m
  -172
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  954
  6,879
  7,702
  8,524
  9,340
  10,143
  10,931
  11,701
  12,452
  13,186
  13,905
  14,612
  15,311
  16,005
  16,699
  17,399
  18,109
  18,833
  19,577
  20,345
  21,142
  21,972
  22,839
  23,747
  24,701
  25,704
  26,761
  27,874
  29,048
  30,286
  31,592
Total cash flow (excl. dividends), $m
  861
  7,573
  9,693
  12,002
  14,516
  17,230
  20,139
  23,237
  26,520
  29,983
  33,623
  37,244
  41,232
  45,394
  49,730
  54,244
  58,940
  63,822
  68,897
  74,172
  79,656
  85,359
  91,291
  97,465
  103,892
  110,588
  117,565
  124,841
  132,432
  140,354
  148,628
Retained Cash Flow (-), $m
  -2,289
  -2,571
  -2,878
  -3,185
  -3,490
  -3,790
  -4,084
  -4,372
  -4,653
  -4,927
  -5,195
  -5,459
  -5,720
  -5,980
  -6,239
  -6,501
  -6,766
  -7,036
  -7,314
  -7,601
  -7,899
  -8,209
  -8,533
  -8,873
  -9,229
  -9,604
  -9,998
  -10,414
  -10,853
  -11,316
  -11,804
Prev. year cash balance distribution, $m
 
  3,947
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  8,949
  6,815
  8,817
  11,026
  13,440
  16,054
  18,865
  21,867
  25,056
  28,427
  31,785
  35,512
  39,414
  43,491
  47,744
  52,174
  56,785
  61,582
  66,570
  71,757
  77,150
  82,758
  88,592
  94,663
  100,984
  107,567
  114,427
  121,579
  129,039
  136,824
Discount rate, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
 
  8,563
  6,214
  7,625
  8,999
  10,298
  11,484
  12,521
  13,381
  14,038
  14,477
  14,598
  14,587
  14,351
  13,906
  13,271
  12,475
  11,547
  10,522
  9,436
  8,325
  7,222
  6,156
  5,154
  4,234
  3,411
  2,692
  2,080
  1,572
  1,160
  836
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

FedEx Corporation (FedEx) provides a portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand. The Company's segments include FedEx Express, TNT Express, FedEx Ground, FedEx Freight and FedEx Services. The FedEx Express segment offers a range of the United States domestic and international shipping services for delivery of packages and freight. TNT Express segment collects, transports and delivers documents, parcels and freight on a day-definite or time-definite basis. The FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services. The FedEx Freight segment offers less-than-truckload (LTL) freight services. The FedEx Services segment provides its other companies with sales, marketing, information technology, communications, customer service and other back-office support.

FINANCIAL RATIOS  of  FedEx (FDX)

Valuation Ratios
P/E Ratio 19.7
Price to Sales 1
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow -317.3
Growth Rates
Sales Growth Rate 19.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 6%
Cap. Spend. - 3 Yr. Gr. Rate 7.7%
Financial Strength
Quick Ratio 180
Current Ratio 0
LT Debt to Equity 92.8%
Total Debt to Equity 92.9%
Interest Coverage 10
Management Effectiveness
Return On Assets 7%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 7.5%
Return On Equity 20.1%
Return On Equity - 3 Yr. Avg. 13.2%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 72.8%
Gross Margin - 3 Yr. Avg. 74.2%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 11.3%
Operating Margin 8.4%
Oper. Margin - 3 Yr. Avg. 6.1%
Pre-Tax Margin 7.6%
Pre-Tax Margin - 3 Yr. Avg. 5.5%
Net Profit Margin 5%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 34.5%
Eff/ Tax Rate - 3 Yr. Avg. 34.5%
Payout Ratio 14.2%

FDX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FDX stock intrinsic value calculation we used $60319 million for the last fiscal year's total revenue generated by FedEx. The default revenue input number comes from 2017 income statement of FedEx. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FDX stock valuation model: a) initial revenue growth rate of 21.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for FDX is calculated based on our internal credit rating of FedEx, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of FedEx.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FDX stock the variable cost ratio is equal to 80.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7011 million in the base year in the intrinsic value calculation for FDX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for FedEx.

Corporate tax rate of 27% is the nominal tax rate for FedEx. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FDX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FDX are equal to 41.7%.

Life of production assets of 10.7 years is the average useful life of capital assets used in FedEx operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FDX is equal to 1.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $16073 million for FedEx - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 269.686 million for FedEx is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of FedEx at the current share price and the inputted number of shares is $59.3 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Q3 Earnings Season Preview   [Sep-22-17 07:26PM  Zacks]
▶ What Hamstrung FedEx Expresss Revenue Growth?   [08:06AM  Market Realist]
▶ Behind FedExs Revenue Results for Fiscal 1Q18   [Sep-21-17 05:36PM  Market Realist]
▶ Company News For Sep 21, 2017   [10:26AM  Zacks]
▶ [$$] Editor's News Picks   [07:39AM  The Wall Street Journal]
▶ Corrections & Amplifications   [Sep-20-17 08:39PM  The Wall Street Journal]
▶ $50M FedEx warehouse a 'turning point' for Sparrows Point   [04:46PM  American City Business Journals]
▶ Cyberattack disrupts FedEx for $300M; major Walgreens deal nearly done   [03:35PM  American City Business Journals]
▶ This stock could be trucking higher   [01:59PM  CNBC Videos]
▶ Amazon Won't Annihilate Retail: FedEx CEO   [01:10PM  TheStreet.com]
▶ Bulls bet on FedEx and Century Aluminum   [12:57PM  CNBC Videos]
▶ Will Fed-Speak Need a Translator?   [12:30PM  TheStreet.com]
▶ FedEx: You're Forgiven   [10:06AM  Barrons.com]
▶ Investors Await Fed Move; Amazon To Link Alexa, Smart Glasses   [09:39AM  Investor's Business Daily]
▶ FedEx Is Ready to Ship Out to New Highs   [08:15AM  TheStreet.com]
▶ FedEx misses Street 1Q forecasts   [09:47PM  Associated Press]
▶ [$$] Business Watch   [08:57PM  The Wall Street Journal]
▶ [$$] FedEx Takes Earnings Hit Following Cyberattack   [07:39PM  The Wall Street Journal]
▶ FedEx: Now That Wasn't So Bad   [05:40PM  Barrons.com]
▶ FedEx Isn't Too Far Off Track   [05:31PM  Bloomberg]
▶ FedEx cuts full year EPS guidance   [04:22PM  CNBC Videos]
▶ FedEx Corp. Reports First Quarter Earnings   [04:15PM  Business Wire]
▶ FedEx bumps up shipping rates across multiple segments   [01:55PM  American City Business Journals]
▶ FedEx to Raise Rates in 2018   [06:15AM  24/7 Wall St.]
▶ BEST Inc. IPO: What Investors Need to Know   [Sep-18-17 06:06PM  Motley Fool]
▶ FedEx to hike shipping rates in 2018   [05:38PM  MarketWatch]
▶ [$$] FedEx Earnings: What to Watch   [07:00AM  The Wall Street Journal]
▶ 3 Things to Watch in the Stock Market This Week   [Sep-17-17 01:00PM  Motley Fool]
▶ [$$] FedEx in Flux   [Sep-15-17 11:31PM  Barrons.com]
▶ Q3 Earnings Season Gets Underway   [04:58PM  Zacks]
▶ FedEx preview: Earnings expected to reflect June cyberattack   [02:25PM  American City Business Journals]
Financial statements of FDX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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