FedEx

Methodology

FedEx's express and ground shipping business shows significant earnings cyclicality tied to e-commerce volumes, fuel costs, and economic activity. The capital-intensive network creates operating leverage but amplifies cycle sensitivity. Fair value calculations require normalizing for volume cycles and accounting for low-to-mid single-digit growth from e-commerce secular tailwinds offset by margin pressures.

Methodology

FedEx typically trades at low PEG ratios (0.8-1.8x) reflecting concerns about competitive pressures from Amazon logistics and ongoing operational restructuring execution. The company's network consolidation and cost reduction initiatives support margin recovery. PEG appears attractive but reflects legitimate questions about sustainable margin improvement amid intense competition.

Methodology

FedEx pays a dividend yielding 2-3%, making PEGY moderately more attractive than PEG for this cyclical logistics provider. The company maintains conservative payout ratios with room for dividend growth as restructuring delivers savings. Total return benefits from yield component that provides stability during volume downturns and cost structure optimization.