As Motley Fool Stock Advisor recommendation FedEx
The shipper's fiscal third-quarter results feature a whopping 39% jump in diluted earnings, to $0.68 per stub. Were it not for charges owing to the company's ongoing realignment, that number would have reached $0.71. The increases were generated on a solid $6.06 billion in revenues, which represents a 9% rise over the same period last year. The figures include only a modest bump -- about a penny per share -- from last month's acquisition of Kinko's.
The real reason for the increasing profit isn't so much the improving national economy as FedEx's improving efficiency. A quick glance at operating margins for the Express segment, the biggest moneymaker, tells the tale. During the same period last year, the margin stood at 3.2%. This year, it improved to 5%, even including the restructuring charges. An advance of that nature is amazing in a giant company like FedEx, and when yearly revenues are measured in the tens of billions, a couple of percentage points means a lot to the bottom line.
Trading around $72, FedEx goes for about 21 times management's forward guidance of $3.40 per share. That makes it look like a bargain compared to competitor UPS
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