From Nasdaq: 2025-06-17 10:50:00

FedEx Corporation’s board of directors announced a 5.1% increase in quarterly dividend payout, raising it to $1.45 per share. This marks the fifth consecutive year of dividend hikes, showcasing a strong history of growth. The dividend will be paid on July 8, 2025, benefiting shareholders of record as of June 23, 2025.

FedEx’s dividend and share repurchase activity signal an aggressive capital allocation strategy to enhance shareholder returns. Dividends have grown substantially from $793 million in 2022 to $1.26 billion in 2024. The company has already distributed $1.01 billion in the first three quarters of fiscal 2025. FDX’s current dividend yield is 2.46%.

FedEx’s share repurchases have accelerated, surpassing the total for fiscal 2024 in the first nine months of fiscal 2025. This suggests the company views its stock as undervalued and aims to boost per-share metrics. However, economic uncertainty and competition require attention to sustainability in capital return strategies.

FedEx’s stock is trading at an attractive valuation, appealing to value investors. With a low price/sales ratio and a Value Score of B, FDX is potentially undervalued relative to its revenue potential. The stock’s forward 12-month price/sales ratio is lower than the sector’s average, presenting an opportunity for investors.

FedEx’s multi-year delivery deal with Amazon has boosted its stock performance, outperforming industry rival UPS. The partnership brings in higher-margin volumes and enhances domestic market presence. This deal provides FedEx with a strategic volume boost, aiding in revenue stability and operational efficiency amidst macroeconomic headwinds.

FedEx’s EPS estimate revisions seem unfavorable due to geopolitical uncertainty, tariff-related pressures, and inflation impacting operations. The Freight segment has seen a decline in performance, affecting volumes and margins. Analysts are revising earnings estimates downward, reflecting the company’s challenging outlook for fiscal 2025.

FedEx faces increasing pressure on its bottom line as operating costs rise, impacting profitability. While the company attributes these expenses to strategic investments, the lack of immediate returns raises concerns about the effectiveness of cost-cutting efforts. The disconnect between rising expenses and delayed benefits questions the timing and execution of FedEx’s optimization strategy.

Investors should steer clear of FedEx stock due to the negative sentiment surrounding it. Challenges like geopolitical uncertainty and inflation may persist, impacting the company’s performance. With a Zacks Rank #4 (Sell), FDX appears risky for investors. The combination of weak current performance and an uncertain future outlook makes it a less favorable investment option.



Read more at Nasdaq: Should You Buy FDX Stock Now After Recent Dividend Hike?