FedEx Corporation (FDX): A Bull Case Theory

We came across a bullish thesis on FedEx Corporation on Quality Value Investing’s Substack by David J. Waldron. In this article, we will summarize the bulls’ thesis on FDX. FedEx Corporation’s share was trading at $273.34 as of December 1st. FDX’s trailing and forward P/E were 16.02 and 15.11 respectively according to Yahoo Finance.

FedEx Corporation (FDX) Has A Warehouse With No People, Says Jim Cramer

FedEx Corporation (FDX) is a large-cap, dividend-paying industrials stock operating globally in air freight and logistics through its Federal Express and FedEx Freight segments. The company provides a comprehensive suite of services, including express shipping, freight, LTL, time-sensitive delivery, small-package logistics, e-commerce solutions, warehousing, distribution, fulfillment, returns, and related business services. Founded in 1971 and headquartered in Memphis, Tennessee, FedEx benefits from a narrow economic moat, driven by cost efficiency and economies of scale in its express and ground package delivery networks.

Despite leadership changes, including founder Fred Smith’s transition to executive chairman, FedEx remains a strong industry player. Over the past five years, the company achieved mid-single-digit annualized revenue growth, lagging behind the S&P 500, and net profit margins similarly underperformed the broader market. Senior management delivered double-digit returns on equity, supported by an active stock buyback program that returned $3 billion to shareholders in fiscal 2025 and continues through fiscal 2026. However, return on invested capital fell below QVI’s threshold and did not exceed the company’s weighted average cost of capital, signaling challenges in capital allocation.

Owners’ earnings, measured via five-year trailing EPS growth plus dividend growth, were in the high double digits, and even using free cash flow growth, the return to shareholders remained strong at 35.3%. While QVI rates FedEx’s fundamentals as neutral, its robust shareholder returns, global scale, and comprehensive logistics and e-commerce capabilities support a bullish value proposition. The company’s stock presents potential for long-term investors seeking a combination of dividend income, capital appreciation, and exposure to a resilient logistics platform with consistent free cash flow generation.

Previously we covered a bullish thesis on FedEx Corporation by Daan Rijnberk in September 2024, which highlighted the company’s strong market position, operational efficiency through DRIVE and Network 2.0 programs, cost-saving initiatives, and attractive valuation. The company’s stock price has depreciated approximately by 8.32% since our coverage. The thesis still stands as FedEx maintains market leadership. David J. Waldron shares a similar bullish view but emphasizes the company’s economic moat and owners’ earnings growth.

FedEx Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held FDX at the end of the second quarter which was 62 in the previous quarter. While we acknowledge the risk and potential of FDX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FDX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.