Fools, I don't mean to belittle FedEx's accomplishments in a year that was obviously rough for anyone who uses -- you know -- fuel. While today's surprise decision by the International Energy Agency to unleash 60 million barrels of crude upon a price-shocked market has given a reprieve to heavy users like Delta
This crimped profits at FedEx in particular, making the company's fiscal 2011 turnaround just that much more impressive:
- Sales up 13% versus fiscal 2010.
- Operating profit up 19%.
- Net income up 23%, with adjusted per-share profits rising 30% to $4.90.
And the fact that FedEx now tells us it's going to grow earnings another 35% in fiscal 2012, to $6.60 per share in profit? Great news -- but still not good enough to get me to buy the stock.
Call me a skeptic, call me a Fool, but no matter how good the headlines read, when I get a copy of FedEx's earnings in hand, I always head straight to the cash flow statement to see how the business is really doing. Sadly, the news here is not good. Despite reporting $1.45 billion in profit last year, FedEx showed a mere $607 million in actual free cash flow generated for the period. At today's prices, therefore, a share of FedEx will set you back about 48 years' worth of actual cash profit -- and it gets worse.
Last year, FedEx laid out $3.4 billion on capital expenditures (the bulk of which went to "aircraft and related equipment"). This year, management promises to spend $4.2 billion on capital expenditures -- a 24% increase. Boeing
Make no mistake: FedEx is an admirable enterprise. Alongside UPS