Intrinsic value of FedEx - FDX

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$211.63

  Intrinsic Value

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  Value-price divergence*

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$211.63

 
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*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 2016), $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 56.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.14
  19.90
  18.41
  17.07
  15.86
  14.78
  13.80
  12.92
  12.13
  11.41
  10.77
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.48
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
Revenue, $m
  50,365
  60,388
  71,505
  83,710
  96,988
  111,319
  126,679
  143,044
  160,391
  178,698
  197,948
  218,130
  239,235
  261,265
  284,223
  308,122
  332,981
  358,824
  385,681
  413,591
  442,595
  472,742
  504,087
  536,687
  570,609
  605,921
  642,699
  681,021
  720,973
  762,643
  806,128
Variable operating expenses, $m
 
  35,132
  41,476
  48,440
  56,017
  64,194
  72,958
  82,296
  92,194
  102,640
  113,625
  124,466
  136,509
  149,079
  162,179
  175,816
  190,000
  204,746
  220,071
  235,996
  252,546
  269,748
  287,634
  306,236
  325,592
  345,741
  366,726
  388,593
  411,390
  435,167
  459,980
Fixed operating expenses, $m
 
  18,754
  19,223
  19,704
  20,196
  20,701
  21,219
  21,749
  22,293
  22,850
  23,422
  24,007
  24,607
  25,223
  25,853
  26,500
  27,162
  27,841
  28,537
  29,251
  29,982
  30,731
  31,500
  32,287
  33,094
  33,922
  34,770
  35,639
  36,530
  37,443
  38,379
Total operating expenses, $m
  47,288
  53,886
  60,699
  68,144
  76,213
  84,895
  94,177
  104,045
  114,487
  125,490
  137,047
  148,473
  161,116
  174,302
  188,032
  202,316
  217,162
  232,587
  248,608
  265,247
  282,528
  300,479
  319,134
  338,523
  358,686
  379,663
  401,496
  424,232
  447,920
  472,610
  498,359
Operating income, $m
  3,077
  6,501
  10,806
  15,566
  20,775
  26,424
  32,502
  38,999
  45,903
  53,207
  60,902
  69,657
  78,119
  86,963
  96,191
  105,807
  115,819
  126,236
  137,073
  148,344
  160,067
  172,262
  184,953
  198,164
  211,923
  226,259
  241,203
  256,789
  273,053
  290,033
  307,769
EBITDA, $m
  5,708
  9,728
  14,503
  19,779
  25,549
  31,804
  38,531
  45,719
  53,357
  61,434
  69,943
  78,876
  88,230
  98,006
  108,204
  118,830
  129,892
  141,402
  153,373
  165,824
  178,773
  192,242
  206,258
  220,847
  236,039
  251,868
  268,366
  285,572
  303,524
  322,266
  341,839
Interest expense (income), $m
  321
  481
  705
  954
  1,227
  1,523
  1,844
  2,187
  2,553
  2,940
  3,350
  3,780
  4,231
  4,703
  5,195
  5,708
  6,242
  6,798
  7,375
  7,976
  8,599
  9,248
  9,922
  10,622
  11,351
  12,109
  12,898
  13,720
  14,577
  15,470
  16,401
Earnings before tax, $m
  2,740
  6,020
  10,101
  14,613
  19,549
  24,901
  30,658
  36,812
  43,351
  50,267
  57,552
  65,877
  73,889
  82,261
  90,996
  100,099
  109,577
  119,439
  129,698
  140,368
  151,467
  163,015
  175,032
  187,542
  200,572
  214,150
  228,305
  243,069
  258,476
  274,563
  291,368
Tax expense, $m
  920
  1,626
  2,727
  3,945
  5,278
  6,723
  8,278
  9,939
  11,705
  13,572
  15,539
  17,787
  19,950
  22,210
  24,569
  27,027
  29,586
  32,248
  35,018
  37,899
  40,896
  44,014
  47,259
  50,636
  54,155
  57,820
  61,642
  65,629
  69,789
  74,132
  78,669
Net income, $m
  1,820
  4,395
  7,374
  10,667
  14,271
  18,178
  22,381
  26,873
  31,646
  36,695
  42,013
  48,090
  53,939
  60,050
  66,427
  73,072
  79,991
  87,190
  94,679
  102,469
  110,571
  119,001
  127,773
  136,906
  146,418
  156,329
  166,662
  177,440
  188,688
  200,431
  212,699

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,534
  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
  45,959
  50,874
  60,240
  70,522
  81,709
  93,782
  106,722
  120,509
  135,123
  150,546
  166,763
  183,766
  201,546
  220,105
  239,447
  259,581
  280,523
  302,295
  324,921
  348,434
  372,868
  398,266
  424,673
  452,138
  480,715
  510,465
  541,448
  573,733
  607,391
  642,497
  679,131
Adjusted assets (=assets-cash), $m
  42,425
  50,874
  60,240
  70,522
  81,709
  93,782
  106,722
  120,509
  135,123
  150,546
  166,763
  183,766
  201,546
  220,105
  239,447
  259,581
  280,523
  302,295
  324,921
  348,434
  372,868
  398,266
  424,673
  452,138
  480,715
  510,465
  541,448
  573,733
  607,391
  642,497
  679,131
Revenue / Adjusted assets
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
  1.187
Average production assets, $m
  22,580
  27,054
  32,034
  37,502
  43,451
  49,871
  56,752
  64,084
  71,855
  80,057
  88,681
  97,722
  107,177
  117,047
  127,332
  138,039
  149,175
  160,753
  172,785
  185,289
  198,283
  211,789
  225,831
  240,436
  255,633
  271,453
  287,929
  305,097
  322,996
  341,664
  361,145
Working capital, $m
  3,981
  543
  644
  753
  873
  1,002
  1,140
  1,287
  1,444
  1,608
  1,782
  1,963
  2,153
  2,351
  2,558
  2,773
  2,997
  3,229
  3,471
  3,722
  3,983
  4,255
  4,537
  4,830
  5,135
  5,453
  5,784
  6,129
  6,489
  6,864
  7,255
Total debt, $m
  13,762
  20,150
  27,249
  35,043
  43,522
  52,674
  62,483
  72,933
  84,010
  95,701
  107,994
  120,881
  134,359
  148,427
  163,087
  178,349
  194,224
  210,726
  227,877
  245,700
  264,221
  283,473
  303,489
  324,307
  345,969
  368,519
  392,005
  416,477
  441,989
  468,599
  496,368
Total liabilities, $m
  32,175
  38,563
  45,662
  53,456
  61,935
  71,087
  80,896
  91,346
  102,423
  114,114
  126,407
  139,294
  152,772
  166,840
  181,500
  196,762
  212,637
  229,139
  246,290
  264,113
  282,634
  301,886
  321,902
  342,720
  364,382
  386,932
  410,418
  434,890
  460,402
  487,012
  514,781
Total equity, $m
  13,784
  12,312
  14,578
  17,066
  19,774
  22,695
  25,827
  29,163
  32,700
  36,432
  40,357
  44,471
  48,774
  53,265
  57,946
  62,819
  67,887
  73,155
  78,631
  84,321
  90,234
  96,380
  102,771
  109,417
  116,333
  123,532
  131,030
  138,843
  146,989
  155,484
  164,350
Total liabilities and equity, $m
  45,959
  50,875
  60,240
  70,522
  81,709
  93,782
  106,723
  120,509
  135,123
  150,546
  166,764
  183,765
  201,546
  220,105
  239,446
  259,581
  280,524
  302,294
  324,921
  348,434
  372,868
  398,266
  424,673
  452,137
  480,715
  510,464
  541,448
  573,733
  607,391
  642,496
  679,131
Debt-to-equity ratio
  0.998
  1.640
  1.870
  2.050
  2.200
  2.320
  2.420
  2.500
  2.570
  2.630
  2.680
  2.720
  2.750
  2.790
  2.810
  2.840
  2.860
  2.880
  2.900
  2.910
  2.930
  2.940
  2.950
  2.960
  2.970
  2.980
  2.990
  3.000
  3.010
  3.010
  3.020
Adjusted equity ratio
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242
  0.242

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,820
  4,395
  7,374
  10,667
  14,271
  18,178
  22,381
  26,873
  31,646
  36,695
  42,013
  48,090
  53,939
  60,050
  66,427
  73,072
  79,991
  87,190
  94,679
  102,469
  110,571
  119,001
  127,773
  136,906
  146,418
  156,329
  166,662
  177,440
  188,688
  200,431
  212,699
Depreciation, amort., depletion, $m
  2,631
  3,227
  3,697
  4,213
  4,774
  5,380
  6,029
  6,720
  7,453
  8,227
  9,041
  9,219
  10,111
  11,042
  12,012
  13,023
  14,073
  15,165
  16,300
  17,480
  18,706
  19,980
  21,305
  22,683
  24,116
  25,609
  27,163
  28,783
  30,471
  32,232
  34,070
Funds from operations, $m
  5,171
  7,622
  11,070
  14,880
  19,044
  23,557
  28,409
  33,593
  39,100
  44,922
  51,054
  57,309
  64,050
  71,093
  78,440
  86,095
  94,064
  102,356
  110,980
  119,949
  129,277
  138,981
  149,078
  159,589
  170,534
  181,938
  193,826
  206,223
  219,159
  232,664
  246,769
Change in working capital, $m
  -537
  90
  100
  110
  120
  129
  138
  147
  156
  165
  173
  182
  190
  198
  207
  215
  224
  233
  242
  251
  261
  271
  282
  293
  305
  318
  331
  345
  360
  375
  391
Cash from operations, $m
  5,708
  9,236
  10,970
  14,770
  18,925
  23,428
  28,271
  33,446
  38,943
  44,757
  50,881
  57,128
  63,860
  70,894
  78,233
  85,880
  93,840
  102,123
  110,738
  119,698
  129,016
  138,709
  148,796
  159,295
  170,229
  181,620
  193,495
  205,878
  218,800
  232,289
  246,378
Maintenance CAPEX, $m
  0
  -2,130
  -2,552
  -3,022
  -3,538
  -4,099
  -4,705
  -5,354
  -6,046
  -6,779
  -7,553
  -8,366
  -9,219
  -10,111
  -11,042
  -12,012
  -13,023
  -14,073
  -15,165
  -16,300
  -17,480
  -18,706
  -19,980
  -21,305
  -22,683
  -24,116
  -25,609
  -27,163
  -28,783
  -30,471
  -32,232
New CAPEX, $m
  -4,828
  -4,474
  -4,981
  -5,468
  -5,949
  -6,420
  -6,881
  -7,332
  -7,771
  -8,202
  -8,624
  -9,041
  -9,455
  -9,869
  -10,285
  -10,707
  -11,137
  -11,578
  -12,032
  -12,503
  -12,994
  -13,506
  -14,042
  -14,605
  -15,197
  -15,820
  -16,476
  -17,168
  -17,898
  -18,668
  -19,481
Cash from investing activities, $m
  -9,446
  -6,604
  -7,533
  -8,490
  -9,487
  -10,519
  -11,586
  -12,686
  -13,817
  -14,981
  -16,177
  -17,407
  -18,674
  -19,980
  -21,327
  -22,719
  -24,160
  -25,651
  -27,197
  -28,803
  -30,474
  -32,212
  -34,022
  -35,910
  -37,880
  -39,936
  -42,085
  -44,331
  -46,681
  -49,139
  -51,713
Free cash flow, $m
  -3,738
  2,632
  3,437
  6,280
  9,438
  12,909
  16,685
  20,760
  25,127
  29,777
  34,704
  39,720
  45,185
  50,914
  56,906
  63,160
  69,681
  76,472
  83,540
  90,894
  98,542
  106,498
  114,774
  123,385
  132,349
  141,684
  151,409
  161,547
  172,118
  183,149
  194,664
Issuance/(repayment) of debt, $m
  6,478
  6,417
  7,099
  7,794
  8,479
  9,151
  9,809
  10,450
  11,077
  11,691
  12,293
  12,888
  13,478
  14,068
  14,661
  15,262
  15,874
  16,503
  17,151
  17,823
  18,522
  19,252
  20,016
  20,818
  21,662
  22,550
  23,485
  24,472
  25,513
  26,610
  27,769
Issuance/(repurchase) of shares, $m
  -2,539
  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  
  3,888
  6,417
  7,099
  7,794
  8,479
  9,151
  9,809
  10,450
  11,077
  11,691
  12,293
  12,888
  13,478
  14,068
  14,661
  15,262
  15,874
  16,503
  17,151
  17,823
  18,522
  19,252
  20,016
  20,818
  21,662
  22,550
  23,485
  24,472
  25,513
  26,610
  27,769
Total cash flow (excl. dividends), $m
  48
  9,048
  10,537
  14,074
  17,918
  22,060
  26,494
  31,211
  36,204
  41,467
  46,997
  52,608
  58,663
  64,982
  71,566
  78,422
  85,555
  92,975
  100,691
  108,716
  117,064
  125,749
  134,790
  144,204
  154,011
  164,234
  174,895
  186,019
  197,631
  209,759
  222,433
Retained Cash Flow (-), $m
  1,209
  -2,033
  -2,267
  -2,488
  -2,707
  -2,922
  -3,132
  -3,336
  -3,537
  -3,732
  -3,925
  -4,114
  -4,303
  -4,491
  -4,681
  -4,872
  -5,068
  -5,269
  -5,476
  -5,690
  -5,913
  -6,146
  -6,390
  -6,647
  -6,916
  -7,199
  -7,498
  -7,813
  -8,145
  -8,496
  -8,865
Prev. year cash balance distribution, $m
 
  3,505
  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
 
  10,521
  8,270
  11,586
  15,211
  19,138
  23,362
  27,874
  32,667
  37,735
  43,072
  48,493
  54,360
  60,490
  66,886
  73,550
  80,487
  87,706
  95,216
  103,026
  111,150
  119,603
  128,399
  137,557
  147,095
  157,035
  167,397
  178,206
  189,486
  201,264
  213,567
Discount rate, %
 
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
 
  10,049
  7,511
  9,956
  12,306
  14,497
  16,471
  18,177
  19,571
  20,622
  21,309
  21,541
  21,495
  21,096
  20,372
  19,362
  18,110
  16,671
  15,099
  13,450
  11,779
  10,137
  8,568
  7,107
  5,782
  4,609
  3,598
  2,747
  2,049
  1,493
  1,060
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 provides transportation, e-commerce, and business services in the United States and internationally. The company’s FedEx Express segment provides various shipping services for the delivery of packages and freight; international trade services specializing in customs brokerage, and ocean and air freight forwarding services; assistance with the customs-trade partnership against terrorism program; and customs clearance services, as well as an information tool that allows customers to track and manage imports. This segment also publishes customs duty and tax information; and offers critical inventory logistics, transportation management, and temperature-controlled transportation services, as well as international express transportation, small-package ground delivery, and freight transportation services. Its FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services; and consolidates and delivers low-weight and less time-sensitive business-to-consumer packages, as well as offers third-party logistics services. The company’s FedEx Freight segment offers less-than-truckload freight, and freight-shipping services. As of May 31, 2016, this segment operated approximately 65,000 vehicles and trailers from a network of approximately 370 service centers. Its FedEx Services segment provides sale, marketing, information technology, communication, customer, technical support, billing and collection, and other back-office support services; FedEx Mobile, a suite of solutions to track packages, create shipping labels, view account-specific rate quotes, and access drop-off location information; access to copying and digital printing through retail and Web-based platforms, signs and graphics, professional finishing, computer rentals, and ground shipping and time-definite express shipping services; and packing services, supplies, and boxes. The company was founded in 1971 and is based in Memphis, Tennessee.

FINANCIAL RATIOS  of  FedEx (FDX)

Valuation Ratios
P/E Ratio 30.9
Price to Sales 1.1
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 63.9
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.1%
Cap. Spend. - 3 Yr. Gr. Rate 7.4%
Financial Strength
Quick Ratio 122
Current Ratio 0
LT Debt to Equity 99.6%
Total Debt to Equity 99.8%
Interest Coverage 10
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 12.6%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 71.3%
Gross Margin - 3 Yr. Avg. 69.8%
EBITDA Margin 11.3%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 6.1%
Oper. Margin - 3 Yr. Avg. 6.1%
Pre-Tax Margin 5.4%
Pre-Tax Margin - 3 Yr. Avg. 5.6%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 33.6%
Eff/ Tax Rate - 3 Yr. Avg. 35.2%
Payout Ratio 15.2%

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 $50365 million for the last fiscal year's total revenue generated by FedEx. The default revenue input number comes from 2016 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 19.9% 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 4.7%, 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 58.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $18297 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 44.8%.

Life of production assets of 10.6 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 0.9%. 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 - $13784 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 264.614 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 $56.0 billion.


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COMPANY NEWS

▶ Higher Package Yield Drove FedExs Express Segments Revenue   [Jun-22-17 06:05PM  Market Realist]
▶ [$$] FedEx Could Deliver Upside to $237   [07:36AM  Barrons.com]
▶ Adobe, FedEx gain; Actuant and Whirlpool fall   [Jun-21-17 05:10PM  Associated Press]
▶ FedEx Corporation Faces a Busy Year Ahead   [01:48PM  Motley Fool]
▶ FedEx: To Fly or Fade?   [12:41PM  Barrons.com]
▶ FedEx concludes record 2017   [11:50AM  American City Business Journals]
▶ FedEx Earnings Arent Enough for Investors   [10:20AM  24/7 Wall St.]
▶ Earnings Calendar, Analyst Estimates And Stocks To Watch   [09:47AM  Investor's Business Daily]
▶ Stocks Open Higher; 2 Software Makers Spike On Earnings   [09:45AM  Investor's Business Daily]
▶ FedEx beats Street on top and bottom line   [07:53AM  CNBC Videos]
▶ FedEx tops 4Q forecasts with boost from online shoppers   [Jun-20-17 11:36PM  Associated Press]
▶ FedEx beats on top and bottom line   [04:18PM  CNBC Videos]
▶ FedEx expected to see quarterly improvements   [Jun-19-17 10:30PM  American City Business Journals]
▶ FedEx: Will Earnings Fuel Further Gains?   [11:24AM  Barrons.com]
▶ As Trump outlines Cuba policy, FedEx talks cargo service   [Jun-18-17 05:25PM  American City Business Journals]
▶ Why FedEx Could Fly   [Jun-15-17 01:59PM  Barrons.com]
▶ FedEx Boosts Dividend 25%, Stock Climbs to New High   [Jun-12-17 06:03PM  Barrons.com]
▶ FedEx: Looking Good?   [03:56PM  Barrons.com]
▶ Where FedEx is adding jobs in New Mexico   [Jun-09-17 04:55PM  American City Business Journals]
▶ Making Sense of the AlibabaSF Express Dispute   [07:36AM  Market Realist]
▶ "Fast Money" final trades: FSLR, FDX, and more   [Jun-07-17 05:59PM  CNBC Videos]
▶ FedEx president shows support for air traffic control reform   [Jun-06-17 05:20PM  American City Business Journals]
▶ FedEx St. Jude Classic celebrates 60 years   [Jun-05-17 03:57PM  American City Business Journals]
▶ FedEx Heads Into Key Test Above 200   [11:34AM  Investopedia]
▶ [$$] How Well Do Firms Measure CEO Performance?   [12:06AM  The Wall Street Journal]
▶ Cramer: Rally Is Earning Some Trust   [Jun-01-17 07:01PM  TheStreet.com]
▶ The stocks really bolstering this rally   [06:13PM  CNBC Videos]
Stock chart of FDX Financial statements of FDX Annual reports 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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