FedEx is set to release earnings on Tuesday, September 15, 2020. This stock has had their stock price surge throughout 2020, due to the global pandemic’s impact on e-commerce sales, triggering an increase in shipping to consumers. We take a look at what’s expected with FedEx earnings, the impact as an investor and what to anticipate for their dividend going forward. FedEx can be a stock to buy before their earnings release and the holiday rush, which will add to your passive income stream in the form of dividends!
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FedEx (FDX) has had an increase in stock price by 50%+ since the start of the year, when they were trading in the ~$150 range!
One of the major reasons for their share price surge has been due to the increase in e-commerce business, as the global pandemic pushed stay at home orders and retailers to close their physical stores. Therefore, an increase in deliveries was an obvious outcome from all of this, which directly impacts FedEx.
FedEx is set to announce and release their quarterly earnings on Tuesday, after the stock market closes. Analysts are expecting stellar earnings, with share price targets north of $260 per share! This would already represent a 10%+ share price appreciation, not to mention other analysts having the share price go even further.
This wouldn’t be a thorough FedEx stock analysis without running them through the Dividend Diplomat Stock Screener! We will run FedEx through three simple metrics of Price to Earnings Ratio, Dividend Payout Ratio and Dividend Growth!
1.) Price to Earnings Ratio: 27 analysts are expected earnings to be $10.95 per share for 2021. The share price as of September 11, 2020 is $232.79. Therefore, the P/E ratio for FedEx stock is 21.26x. This is significantly below the S&P 500 current P/E ratio of 29x earnings.
2.) Dividend Payout Ratio: At an earning expectation of $10.95 per share for the FedEx stock with a dividend paid per year of $2.60 per share, this equates to a significantly low dividend payout ratio of 23.74%. FedEx has built safety around the dividend, at such a low dividend payout ratio. Further, this allows them to reinvest their earnings back in the business to attack Amazon and to work with Amazon’s biggest rivals, such as Walmart. Lastly, they can return to increasing their dividend when they so choose.
3.) Dividend Growth: Sadly, the annual dividend growth streak ended, as FedEx last increased their dividend in the end of 2018. Therefore, they did not increase their dividend in 2019 and 2020. However, even with that being said, their dividend growth rate is 23%, even when you include two 0% years in the equation! I anticipate dividend growth to return to double digit levels in 2021.
4.) Bonus Dividend Yield: At a share price of $232.79 per share with a dividend per year of $2.60, the dividend yield is a low 1.11%. This is significantly below their competitor UPS and the S&P 500.
Do you have a plan on investing into FedEx? Is FedEx a stock to buy on your stock watch list? Already own and are eagerly awaiting the earnings release?
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