Topic: Growth Stocks

FEDEX CORP. $157

FEDEX CORP. $157 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 268.4 million; Market cap: $42.1 billion; Price-to-sales ratio: 0.9; Dividend yield: 1.0%; TSINetwork Rating: Average; www.fedex.com) delivers packages in the U.S. and 220 other countries.

The company has now completed its acquisition of TNT Express NV, a Netherlands-based courier that operates across Europe. The deal makes FedEx the second-largest courier in Europe after United Parcel Service.

If you exclude costs related to this purchase and other unusual items, the company earned $3.0 billion in the fiscal year ended May 31, 2016. That’s up 17.3% from $2.6 billion in 2015. Due to fewer shares outstanding, earnings per share gained 20.7%, to $10.80 from $8.95. FedEx continues to benefit from falling fuel prices: in 2016, these expenses dropped 35.5%.

Revenue for the year rose 6.1%, to $50.4 billion from $47.6 billion. Revenue from the company’s ground delivery business jumped 27.6% following an acquisition. That more than offset a 2.9% decline in revenue from overnight express deliveries.

FedEx expects to earn $11.75 to $12.25 a share in fiscal 2017. The stock trades at just 13.1 times the midpoint of that range. The company also increased its quarterly dividend by 60.0%. The new annual rate of $1.60 a share yields 1.0%.

FedEx is a buy.

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