Intrinsic value of FedEx - FDX

Previous Close

$274.32

  Intrinsic Value

$416.49

stock screener

  Rating & Target

str. buy

+52%

Previous close

$274.32

 
Intrinsic value

$416.49

 
Up/down potential

+52%

 
Rating

str. buy

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
Revenue, $m
  60,319
  65,929
  71,777
  77,865
  84,199
  90,785
  97,629
  104,742
  112,133
  119,815
  127,802
  136,108
  144,750
  153,746
  163,114
  172,874
  183,048
  193,659
  204,731
  216,288
  228,359
  240,971
  254,153
  267,937
  282,355
  297,441
  313,232
  329,763
  347,076
  365,211
  384,211
Variable operating expenses, $m
 
  52,874
  57,501
  62,318
  67,329
  72,539
  77,954
  83,581
  89,428
  95,506
  101,825
  107,681
  114,518
  121,634
  129,046
  136,767
  144,816
  153,211
  161,970
  171,114
  180,664
  190,642
  201,071
  211,976
  223,382
  235,318
  247,810
  260,889
  274,586
  288,933
  303,965
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
  60,060
  64,867
  69,868
  75,068
  80,471
  86,085
  91,915
  97,970
  104,262
  110,800
  116,880
  123,947
  131,299
  138,952
  146,921
  155,224
  163,879
  172,905
  182,322
  192,152
  202,418
  213,141
  224,348
  236,063
  248,316
  261,133
  274,545
  288,583
  303,280
  318,671
Operating income, $m
  5,037
  5,868
  6,910
  7,997
  9,132
  10,314
  11,545
  12,827
  14,163
  15,553
  17,003
  19,229
  20,804
  22,447
  24,162
  25,952
  27,824
  29,780
  31,825
  33,966
  36,207
  38,554
  41,013
  43,590
  46,292
  49,126
  52,099
  55,218
  58,493
  61,931
  65,540
EBITDA, $m
  8,032
  9,155
  10,425
  11,750
  13,131
  14,570
  16,068
  17,627
  19,251
  20,942
  22,702
  24,537
  26,449
  28,443
  30,523
  32,695
  34,962
  37,332
  39,810
  42,401
  45,113
  47,952
  50,925
  54,039
  57,304
  60,726
  64,315
  68,079
  72,029
  76,174
  80,525
Interest expense (income), $m
  484
  522
  627
  738
  852
  971
  1,096
  1,224
  1,358
  1,498
  1,642
  1,793
  1,949
  2,112
  2,281
  2,458
  2,641
  2,833
  3,033
  3,241
  3,459
  3,686
  3,924
  4,172
  4,432
  4,703
  4,987
  5,285
  5,596
  5,922
  6,264
Earnings before tax, $m
  4,579
  5,346
  6,283
  7,260
  8,279
  9,342
  10,449
  11,603
  12,804
  14,056
  15,360
  17,436
  18,855
  20,335
  21,880
  23,495
  25,182
  26,947
  28,792
  30,725
  32,748
  34,867
  37,089
  39,418
  41,860
  44,422
  47,111
  49,934
  52,897
  56,009
  59,277
Tax expense, $m
  1,582
  1,444
  1,696
  1,960
  2,235
  2,522
  2,821
  3,133
  3,457
  3,795
  4,147
  4,708
  5,091
  5,490
  5,908
  6,344
  6,799
  7,276
  7,774
  8,296
  8,842
  9,414
  10,014
  10,643
  11,302
  11,994
  12,720
  13,482
  14,282
  15,122
  16,005
Net income, $m
  2,997
  3,903
  4,586
  5,300
  6,044
  6,820
  7,628
  8,470
  9,347
  10,261
  11,213
  12,728
  13,764
  14,844
  15,973
  17,151
  18,383
  19,671
  21,019
  22,429
  23,906
  25,453
  27,075
  28,775
  30,558
  32,428
  34,391
  36,452
  38,615
  40,886
  43,272

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
  48,728
  53,050
  57,550
  62,232
  67,099
  72,158
  77,414
  82,877
  88,555
  94,458
  100,597
  106,985
  113,633
  120,557
  127,771
  135,290
  143,133
  151,316
  159,858
  168,780
  178,101
  187,844
  198,032
  208,688
  219,838
  231,509
  243,728
  256,523
  269,927
  283,970
Adjusted assets (=assets-cash), $m
  44,583
  48,728
  53,050
  57,550
  62,232
  67,099
  72,158
  77,414
  82,877
  88,555
  94,458
  100,597
  106,985
  113,633
  120,557
  127,771
  135,290
  143,133
  151,316
  159,858
  168,780
  178,101
  187,844
  198,032
  208,688
  219,838
  231,509
  243,728
  256,523
  269,927
  283,970
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
  25,901
  28,283
  30,792
  33,404
  36,122
  38,947
  41,883
  44,934
  48,105
  51,401
  54,827
  58,390
  62,098
  65,957
  69,976
  74,163
  78,528
  83,080
  87,829
  92,788
  97,966
  103,377
  109,032
  114,945
  121,130
  127,602
  134,376
  141,469
  148,896
  156,676
  164,827
Working capital, $m
  4,710
  857
  933
  1,012
  1,095
  1,180
  1,269
  1,362
  1,458
  1,558
  1,661
  1,769
  1,882
  1,999
  2,120
  2,247
  2,380
  2,518
  2,661
  2,812
  2,969
  3,133
  3,304
  3,483
  3,671
  3,867
  4,072
  4,287
  4,512
  4,748
  4,995
Total debt, $m
  14,931
  17,926
  21,072
  24,349
  27,757
  31,300
  34,983
  38,810
  42,787
  46,920
  51,218
  55,687
  60,337
  65,177
  70,217
  75,469
  80,943
  86,653
  92,610
  98,829
  105,324
  112,110
  119,203
  126,619
  134,377
  142,494
  150,991
  159,886
  169,201
  178,959
  189,182
Total liabilities, $m
  32,479
  35,474
  38,620
  41,897
  45,305
  48,848
  52,531
  56,358
  60,335
  64,468
  68,766
  73,235
  77,885
  82,725
  87,765
  93,017
  98,491
  104,201
  110,158
  116,377
  122,872
  129,658
  136,751
  144,167
  151,925
  160,042
  168,539
  177,434
  186,749
  196,507
  206,730
Total equity, $m
  16,073
  13,254
  14,430
  15,654
  16,927
  18,251
  19,627
  21,057
  22,543
  24,087
  25,693
  27,362
  29,100
  30,908
  32,791
  34,754
  36,799
  38,932
  41,158
  43,481
  45,908
  48,444
  51,094
  53,865
  56,763
  59,796
  62,970
  66,294
  69,774
  73,420
  77,240
Total liabilities and equity, $m
  48,552
  48,728
  53,050
  57,551
  62,232
  67,099
  72,158
  77,415
  82,878
  88,555
  94,459
  100,597
  106,985
  113,633
  120,556
  127,771
  135,290
  143,133
  151,316
  159,858
  168,780
  178,102
  187,845
  198,032
  208,688
  219,838
  231,509
  243,728
  256,523
  269,927
  283,970
Debt-to-equity ratio
  0.929
  1.350
  1.460
  1.560
  1.640
  1.710
  1.780
  1.840
  1.900
  1.950
  1.990
  2.040
  2.070
  2.110
  2.140
  2.170
  2.200
  2.230
  2.250
  2.270
  2.290
  2.310
  2.330
  2.350
  2.370
  2.380
  2.400
  2.410
  2.420
  2.440
  2.450
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
  3,903
  4,586
  5,300
  6,044
  6,820
  7,628
  8,470
  9,347
  10,261
  11,213
  12,728
  13,764
  14,844
  15,973
  17,151
  18,383
  19,671
  21,019
  22,429
  23,906
  25,453
  27,075
  28,775
  30,558
  32,428
  34,391
  36,452
  38,615
  40,886
  43,272
Depreciation, amort., depletion, $m
  2,995
  3,287
  3,515
  3,752
  3,999
  4,256
  4,523
  4,800
  5,089
  5,388
  5,700
  5,308
  5,645
  5,996
  6,361
  6,742
  7,139
  7,553
  7,984
  8,435
  8,906
  9,398
  9,912
  10,450
  11,012
  11,600
  12,216
  12,861
  13,536
  14,243
  14,984
Funds from operations, $m
  2,728
  7,189
  8,101
  9,052
  10,043
  11,076
  12,151
  13,270
  14,436
  15,649
  16,913
  18,036
  19,409
  20,841
  22,334
  23,893
  25,522
  27,224
  29,003
  30,864
  32,812
  34,851
  36,987
  39,224
  41,570
  44,029
  46,607
  49,312
  52,151
  55,130
  58,256
Change in working capital, $m
  -2,202
  73
  76
  79
  82
  86
  89
  92
  96
  100
  104
  108
  112
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  187
  196
  205
  215
  225
  236
  247
Cash from operations, $m
  4,930
  7,117
  8,025
  8,973
  9,961
  10,990
  12,062
  13,178
  14,340
  15,549
  16,809
  17,928
  19,297
  20,724
  22,212
  23,766
  25,390
  27,086
  28,859
  30,714
  32,655
  34,687
  36,815
  39,045
  41,382
  43,833
  46,402
  49,098
  51,926
  54,894
  58,009
Maintenance CAPEX, $m
  0
  -2,355
  -2,571
  -2,799
  -3,037
  -3,284
  -3,541
  -3,808
  -4,085
  -4,373
  -4,673
  -4,984
  -5,308
  -5,645
  -5,996
  -6,361
  -6,742
  -7,139
  -7,553
  -7,984
  -8,435
  -8,906
  -9,398
  -9,912
  -10,450
  -11,012
  -11,600
  -12,216
  -12,861
  -13,536
  -14,243
New CAPEX, $m
  -5,116
  -2,382
  -2,509
  -2,612
  -2,717
  -2,825
  -2,936
  -3,051
  -3,171
  -3,296
  -3,426
  -3,563
  -3,707
  -3,859
  -4,019
  -4,187
  -4,365
  -4,552
  -4,750
  -4,958
  -5,178
  -5,410
  -5,655
  -5,913
  -6,185
  -6,472
  -6,774
  -7,092
  -7,427
  -7,780
  -8,151
Cash from investing activities, $m
  -4,981
  -4,737
  -5,080
  -5,411
  -5,754
  -6,109
  -6,477
  -6,859
  -7,256
  -7,669
  -8,099
  -8,547
  -9,015
  -9,504
  -10,015
  -10,548
  -11,107
  -11,691
  -12,303
  -12,942
  -13,613
  -14,316
  -15,053
  -15,825
  -16,635
  -17,484
  -18,374
  -19,308
  -20,288
  -21,316
  -22,394
Free cash flow, $m
  -51
  2,380
  2,945
  3,561
  4,207
  4,881
  5,585
  6,319
  7,084
  7,880
  8,710
  9,381
  10,281
  11,219
  12,197
  13,218
  14,283
  15,395
  16,557
  17,771
  19,041
  20,371
  21,762
  23,220
  24,747
  26,349
  28,028
  29,789
  31,638
  33,578
  35,615
Issuance/(repayment) of debt, $m
  1,108
  3,017
  3,147
  3,276
  3,408
  3,543
  3,683
  3,827
  3,977
  4,134
  4,297
  4,469
  4,650
  4,840
  5,040
  5,252
  5,474
  5,709
  5,957
  6,219
  6,495
  6,786
  7,093
  7,417
  7,758
  8,117
  8,496
  8,895
  9,315
  9,758
  10,223
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
  3,017
  3,147
  3,276
  3,408
  3,543
  3,683
  3,827
  3,977
  4,134
  4,297
  4,469
  4,650
  4,840
  5,040
  5,252
  5,474
  5,709
  5,957
  6,219
  6,495
  6,786
  7,093
  7,417
  7,758
  8,117
  8,496
  8,895
  9,315
  9,758
  10,223
Total cash flow (excl. dividends), $m
  861
  5,396
  6,091
  6,838
  7,615
  8,425
  9,268
  10,146
  11,061
  12,014
  13,007
  13,850
  14,931
  16,059
  17,238
  18,469
  19,757
  21,104
  22,514
  23,990
  25,536
  27,157
  28,855
  30,637
  32,505
  34,466
  36,524
  38,685
  40,953
  43,336
  45,838
Retained Cash Flow (-), $m
  -2,289
  -1,128
  -1,176
  -1,224
  -1,273
  -1,324
  -1,376
  -1,430
  -1,486
  -1,544
  -1,606
  -1,670
  -1,737
  -1,808
  -1,883
  -1,962
  -2,045
  -2,133
  -2,226
  -2,324
  -2,427
  -2,535
  -2,650
  -2,771
  -2,899
  -3,033
  -3,174
  -3,323
  -3,480
  -3,646
  -3,820
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
 
  8,215
  4,916
  5,613
  6,342
  7,101
  7,892
  8,716
  9,575
  10,469
  11,402
  12,180
  13,194
  14,251
  15,355
  16,507
  17,712
  18,971
  20,288
  21,666
  23,110
  24,621
  26,205
  27,866
  29,607
  31,433
  33,350
  35,361
  37,473
  39,690
  42,019
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
 
  7,862
  4,482
  4,855
  5,176
  5,441
  5,645
  5,785
  5,859
  5,866
  5,806
  5,594
  5,419
  5,189
  4,910
  4,589
  4,235
  3,858
  3,466
  3,071
  2,681
  2,305
  1,949
  1,621
  1,324
  1,062
  835
  643
  484
  357
  257
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 24.6
Price to Sales 1.2
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow -395.6
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 9.3% 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 42.9%.

Life of production assets of 11 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 266.851 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 $73.2 billion.

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COMPANY NEWS

▶ Longleaf Partners Fund 4th Quarter Commentary   [Jan-19-18 06:04PM  GuruFocus.com]
▶ American Airlines: Analysts Views before 4Q17   [01:10PM  Market Realist]
▶ FedEx realigning several subsidiaries under FTN and CEO Richard Smith   [Jan-17-18 04:33PM  American City Business Journals]
▶ Fred Smith floats idea of higher FedEx wages post-tax reform   [Jan-16-18 04:50PM  American City Business Journals]
▶ 3 Embarrassingly Low Dividend Stocks   [07:43AM  Motley Fool]
▶ These Are The Five Strongest Industry Groups In 2018   [07:34AM  Investor's Business Daily]
▶ How FedEx Can Rise 20% as Amazon Gets Squeezed   [Jan-10-18 08:00AM  Investopedia]
▶ Is FedEx Corporation (FDX) a Buy?   [06:34AM  Motley Fool]
▶ "Fast Money" final trades: LOW, BAC and more   [Jan-09-18 05:59PM  CNBC Videos]
▶ Airfreight traffic soars on demand   [01:04PM  Yahoo Finance Video]
▶ Memphis public companies talk tax reform   [09:20AM  American City Business Journals]
▶ [$$] Mr. Long-Term   [Jan-07-18 10:06PM  The Wall Street Journal]
▶ Cummins, FedEx, U of M launching global tech program at East's T-STEM Academy   [Jan-05-18 04:23PM  American City Business Journals]
▶ $16M facility planned for FedEx Freight   [Jan-03-18 02:35PM  American City Business Journals]
▶ 9 More Stocks Still Growing Faster Than Amazon   [Jan-02-18 02:04PM  InvestorPlace]
▶ [$$] Trump Criticizes Post Office for Charging Amazon So Little   [Dec-29-17 11:30PM  The Wall Street Journal]
▶ Trump Goes 'Postal' On Amazon In Tweet Over Fees   [04:06PM  Investor's Business Daily]
▶ 2017 in review: The biggest stories for FedEx, AutoZone, IP and other public companies   [Dec-28-17 02:25PM  American City Business Journals]
▶ FedEx thanks Congress and Trump for tax reform   [12:29PM  American City Business Journals]
▶ We Should All Have Problems Like FedEx   [11:00AM  Barrons.com]
▶ US Tax Reforms: An Opportunity for FedEx?   [07:31AM  Market Realist]
▶ Holiday delivery scorecard: FedEx vs. UPS   [07:09AM  CNBC Videos]
▶ What Happened to FedExs Operating Margins in Fiscal 2Q18?   [Dec-25-17 10:31AM  Market Realist]
▶ Fresh snow brings White Christmas to much of U.S.   [Dec-24-17 07:31PM  MarketWatch]
▶ A Look at FedExs Revenues in Fiscal 2Q18   [10:35AM  Market Realist]
▶ FedEx Sees Growth Ahead   [09:24AM  Motley Fool]
▶ Did Stitch Fix Knit Itself Into a Knot?   [Dec-21-17 07:15PM  Motley Fool]
▶ Why FedEx Corporation Is a Good GARP Name   [09:08AM  InvestorPlace]
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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