Revenue and Earnings Ratio

Topics: Revenue, Profit margin, Petroleum Pages: 2 (685 words) Published: March 10, 2014
Strengths:
Revenue Growth: In 2008, FedEx reported revenue of $38 billion; in 2012 the company reported revenue of $42.7 billion, representing a year over year annual growth rate of 2.96%, and while this may not seem like an explosive number, the caliber of growth is solid and expected to accelerate into the future, with 2015 revenues reaching nearly $49 billion. Established Distribution System: The company possesses a massive fleet of airplanes, trucks, locations, and employees, and is distinctly established and has the capability of transporting thousands of packages every day. Dividend: The company currently pays out a quarterly dividend of $0.14, which annualized puts the dividend as yielding 0.62%. Reasonable Valuation: The company carries a price to earnings ratio of 14.02, which by nearly all standards is a relatively reasonable valuation. Institutional Vote of Confidence: 78% of shares outstanding are held by institutional investors, displaying the huge amount of confidence long-term and big-money investors have in the company and its future. Money on the Balance Sheets: The company currently has $1.176 billion in cash or cash equivalents on its balance sheet, a large cushion for times of economic downfall. Weaknesses:

Relative Small Size: Compared to UPS, FedEx is considered a rather small company, and in an industry in which consumers have to put their trust in a company to get their product to a place on time, consumers often turn to the largest company with the best reputation. Margins: FedEx’s net profit margin is only 4.76%, leaving little room for the company to swallow rising input costs. Declining Cash Flow per Share: In 2012, the company possessed $17.00 of cash flow per share, however in 2013 the average analysts estimates show the cash flow per share only reaching $14.60, representing a 14.12% year over year decline. Opportunities:

Acquisitions: During the 2012 year FedEx has acquired Rapidao Cometa, Opek Sp., and TATEX; and further...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Price Earnings Ratio Essay
  • Essay on Ratios
  • Essay about Price / Earnings Ratio and Housing Price
  • Essay about ratio analysis
  • Ratios Essay
  • Essay on Ratio
  • Long-Term Price Earning Ratio Essay
  • What Determines Price-Earnings Ratios Essay

Become a StudyMode Member

Sign Up - It's Free