Value Stocks Episode 10 – FedEx

by | Jan 16, 2019 | Value Stocks Podcasts Episodes | 0 comments

stock analysis
Summary:
  • Recent price pullback has brought shares to a much more reasonable value based on future growth expectations.
  • Moat is well-established and will likely not be penetrated by Amazon or any other company in the near term.
  • Growth expectations should be slightly better than GDP growth and inflation over the long term.

Introduction

In this episode, we discuss FedEx Corporation (NYSE: FDX). FedEx is a courier/delivery services company founded in the 1970s and headquartered in Memphis, Tennessee. They have been a leader in their industry for many decades, having quickly adapted to and benefiting from trends such as e-commerce, globalization and technological innovation. Recently, the stock price has dropped almost 40% from its 52-week high of $274, which initiated our interest in researching the company. 

Podcast Summary Notes

0:00 – Company Introduction

  • What do they do?
  • What is their market cap?
  • Do you own the stock?

2:45 – Why did you want to talk about this company?

  • Down almost 40% from its 52-week high
  • Attractive/strong moat
  • High-quality company with good reputation and few competitors

4:00 – What do you like about the company?

  • Price drop
  • Brand recognition
  • First-mover advantage
  • Leadership
  • Network advantage

7:20 – What do you dislike about the company?

  • Capital intensive
  • FedEx Ground business is becoming more competitive due to Amazon and other players
  • TNT acquisition
  • Cyclical

19:30 – Thoughts on management?

  • Excellent.
  • Industry leaders

22:00 – What are your thoughts on moat?

  • Strong identifiable moat in the express shipment division due to airlines having high barriers to entry
  • Strong moat when you assess their whole network which they have built up over the years

26:00 – What are your thoughts on growth, cash flow, and capital allocation?

  • Growth long term could be slightly above GDP and inflation
  • Minimal distribution of dividends and buybacks by management

31:00 – Valuation/Intrinsic Value of the business

  • How did you calculate the intrinsic value?
  • Is it an above-average business?

42:50 – Final thoughts on the business

46:00 – Thoughts on markets in general and Berkshire AGM

Welcome to StockWriteUps.com!

My name is Alex Middleton and I am from Calgary, Alberta.  I believe investing requires one to carefully study publicly available information in an attempt to develop a thesis based on reason and logic.  It also requires one to properly account for the unknown by applying probabilities and margin of safety to their thesis.  I hope you enjoy the content!

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