Last update on 2024-06-05

FedEx (FDX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze FedEx (FDX) using the Piotroski F-Score. Detailed 2023 financial indicators and score of 5/9 highlight strengths and weaknesses.

Short Analysis - Piotroski Score: 5

We're running FedEx (FDX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

FedEx (FDX)'s Piotroski F-Score is 5 out of 9, indicating a balanced but not exceptionally strong financial position. The company shows strengths in profitability and operational cash flow, highlighted by a positive net income and cash flow from operations in 2023. However, there are concerns regarding liquidity, operating efficiency, and leverage. The current ratio has decreased, and gross margin, as well as asset turnover ratios, have not shown positive trends. Despite the improvement in shareholder value showcased by the reduction in the number of outstanding shares, these financial health indicators present a mixed picture.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 5, FedEx (FDX) displays both strengths, like consistent profitability and strong operational cash flow, and weaknesses, such as declining liquidity and operating efficiency. As an investor, it might be worth monitoring FedEx's financial reports and further individual financial ratios trends while comparing some of its competitors. While FedEx shows resilience, investors should stay cautious and aim for more thorough research to make an informed decision before considering investing in the stock.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of FedEx (FDX)

Company has a positive net income?

Net income is the total profit of a company after all expenses and taxes have been deducted from total revenue. It is a critical measure of a company's profitability and is essential for assessing financial health.

For the fiscal year 2023, FedEx reported a net income of $3.97 billion, which is a positive figure. Examining the historical data, FedEx has had predominantly positive net incomes over the last 20 years. With only minor net losses in the fiscal year 2009 and some fluctuations, the company has shown resilience and profitability. The recent data indicates a robust recovery with a positive trend in earnings. Overall, this positive net income trend for 2023 adds 1 point in the Piotroski Score, affirming FedEx's financial health.

Company has a positive cash flow?

Positive cash flow from operations (CFO) indicates that a company is generating enough cash to sustain its operations and possibly invest in growth, which is critical for long-term stability.

FedEx's CFO for 2023 stands at $8.848 billion, which is positive. Over the last 20 years, FedEx has shown fluctuating CFO values but has consistently maintained positive cash flow. For example, the company had a cash inflow of $10.135 billion in 2021, while in 2003 it was significantly lower at $1.871 billion. The positive CFO score of 1 is a strong indicator of healthy operational cash generation, essential for funding future initiatives and meeting financial commitments. This stable trend is particularly favorable as it showcases FedEx's ability to generate cash internally over two decades.

Return on Assets (ROA) are growing?

ROA, or return on assets, measures a company's profitability in relation to its total assets. A higher ROA indicates a more efficient use of assets to generate earnings.

FedEx's ROA increased slightly from 0.0453 in 2022 to 0.0459 in 2023. Although this progression is marginal, it is a positive indicator and scores 1 point according to the Piotroski criteria. An upward trend in ROA demonstrates that FedEx is improving its efficiency in generating profits from its assets. Notably, while FedEx's ROA is improving, it remains significantly below the industry median ROA of 0.1817 in 2023, indicating a need for further improvement to match industry standards.

Operating Cashflow are higher than Netincome?

The operating cash flow vs. net income criterion assesses a company's ability to generate cash relative to its reported earnings. This measure is crucial as it determines if a company's operations are actually generating the cash needed to sustain growth and pay down debts.

In 2023, FedEx's operating cash flow stood at $8.848 billion, significantly higher than its net income of $3.972 billion, resulting in a score of 1 point for this criterion. Historically, the operating cash flow has often outpaced net income, indicating strong cash generation. For instance, in 2021, the operating cash flow was $10.135 billion compared to net income of $5.231 billion.

Liquidity of FedEx (FDX)

Leverage is declining?

Change in Leverage is the difference in debt level a company uses to finance its operations. A rising leverage indicates higher risk.

FedEx's leverage ratio increased from 0.4032 in 2022 to 0.411 in 2023. Despite the slight increase, examining the last 20 years of leverage shows an upward trend since 2013. Higher leverage implies increased financial risk, though manageable thus far. Hence, 0 points.

Current Ratio is growing?

The Current Ratio, a key liquidity metric, gauges a company's ability to meet short-term liabilities with short-term assets. An increasing ratio indicates improved liquidity.

In 2023, FedEx's Current Ratio decreased to 1.3698 from 1.4267 in 2022. This downward trend, reflected in the 3.99% reduction, implies slightly reduced liquidity, hampering the company's short-term financial flexibility. For further analysis, comparing this to the industry median (1.1884 for 2023), FedEx still maintains a higher ratio, suggesting relative competitive strength in liquidity despite the decrease.

Number of shares not diluted?

The criterion assesses the change in the number of outstanding shares. A decrease is seen positively because it suggests better shareholder value and potential for higher earnings per share.

The outstanding shares of FedEx have decreased from 263 million in 2022 to 254 million in 2023. This gives FedEx a score of 1 point for this criterion. Historically, FedEx has seen fluctuations in its outstanding shares, peaking at 317 million in both 2011 and 2012 and decreasing to 254 million in 2023. This is good as it suggests steps to enhance shareholder value.

Operating of FedEx (FDX)

Cross Margin is growing?

Gross Margin is a measure that reveals the proportion of money left over from revenues after accounting for the cost of goods sold (COGS). It is a crucial metric for evaluating the financial health and profitability of a company.

In 2023, the Gross Margin for FedEx (FDX) is 0.2126 compared to 0.2157 in 2022, indicating a decrease. This results in a score of 0 points in the Piotroski analysis. Over the last 20 years, FedEx's Gross Margin has seen significant fluctuations, peaking at 0.8669 in 2007 and hitting a low of 0.1928 in 2019. Meanwhile, the median Gross Margin for the industry has been relatively more stable, generally sitting below FedEx’s margins though increasing slightly over time. The current figures highlight a concerning downward trend for FedEx relative to its own historical standards.

Asset Turnover Ratio is growing?

Asset Turnover is a ratio that measures the efficiency of a company's use of its assets in generating sales revenue. A higher ratio indicates a more efficient use of assets.

FedEx's Asset Turnover in 2023 was 1.0414 compared to 1.1082 in 2022, indicating a decrease. This results in a score of 0 for this criterion. Historically, FedEx's Asset Turnover ratios have shown variability, with a peak at 1.5404 in 2003 and a significant low of 0.1808 in 2016. The recent decrease implies a slight reduction in efficiency in using assets to generate revenue compared to the previous year.