DCF Studio

    FDX · NYQ · Industrials

    FedEx Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 125.96

    Market price

    USD 303.65

    Implied upside

    -58.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 125.96-58.5%
    Exit multiple
    USD 252.68-16.8%
    Market price
    USD 303.65

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 96.3bnUSD 97.9bnUSD 99.5bnUSD 101.2bnUSD 102.8bn+1.7%
    EBITUSD 6.5bnUSD 6.6bnUSD 6.7bnUSD 6.8bnUSD 6.9bn+1.7%
    NOPATUSD 5.1bnUSD 5.2bnUSD 5.3bnUSD 5.4bnUSD 5.5bn+1.7%
    Add depreciation & amortisationUSD 4.6bnUSD 4.6bnUSD 4.7bnUSD 4.8bnUSD 4.9bn+1.7%
    Less capital expenditureUSD -5.1bnUSD -5.2bnUSD -5.3bnUSD -5.4bnUSD -5.5bn+1.7%
    Less increase in working capitalUSD -813.1mUSD -826.6mUSD -840.3mUSD -854.3mUSD -868.4m+1.7%
    Free cashflow to firmUSD 3.7bnUSD 3.8bnUSD 3.9bnUSD 3.9bnUSD 4.0bn+1.7%
    Discount factor0.95830.88010.80830.74230.6817-
    Present valueUSD 3.6bnUSD 3.3bnUSD 3.1bnUSD 2.9bnUSD 2.7bn-6.6%
    Present Value Of The ForecastUSD 15.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.244Reported 1.364, pulled toward 1.0 (Blume)
    Cost of equity11.84%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 71.9bn62.6% of capital
    Total debtUSD 42.9bn37.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 125.96

    74% of EV

    Forecast FCFF, final year
    USD 4.0bn
    Capex at depreciation, working capital in reinvestment
    USD 5.5bn
    Less reinvestment at g/ROIC (26.4% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 4.0bn
    ROIC (reported)
    9.5%
    Terminal value, undiscounted
    USD 64.6bn
    Terminal value, discounted
    USD 44.1bn
    Enterprise value
    USD 59.7bn
    Less net debt
    USD 29.6bn
    Equity value
    USD 30.1bn

    Exit at 9.2x EBITDA

    Value per shareUSD 252.68

    83% of EV

    Terminal value, undiscounted
    USD 109.1bn
    Terminal value, discounted
    USD 74.3bn
    Enterprise value
    USD 90.0bn
    Less net debt
    USD 29.6bn
    Equity value
    USD 60.4bn

    Spread between methods: 67%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.89%213.64223.90236.30251.65271.26
    7.89%160.70165.43170.89177.29184.94
    8.89%122.13123.96125.96128.14130.59
    9.89%94.0594.8195.5796.3397.09
    10.89%73.0073.6674.3274.9875.64

    Outlined: this model. Green text: above today's price of 303.65. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year1.7%38.1%+36.5pp
    EBIT margin6.7%11.1%+4.4pp
    Discount rate8.9%6.2%-2.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.