Stock Analysis on Net

FedEx Corp. (NYSE:FDX)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

FedEx Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Net operating profit after taxes (NOPAT)1 4,954 5,421 5,014 7,163 2,531 1,216
Cost of capital2 12.17% 11.59% 11.10% 11.92% 10.14% 10.67%
Invested capital3 70,265 69,545 66,462 64,229 57,553 53,043
 
Economic profit4 (3,595) (2,641) (2,366) (493) (3,302) (4,445)

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,95412.17% × 70,265 = -3,595

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. FedEx Corp. economic profit decreased from 2022 to 2023 and from 2023 to 2024.

Net Operating Profit after Taxes (NOPAT)

FedEx Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Net income 4,331 3,972 3,826 5,231 1,286 540
Deferred income tax expense (benefit)1 (162) 446 322 802 348 (85)
Increase (decrease) in allowance for credit losses2 (36) 132 (18) 183 54 (78)
Increase (decrease) in equity equivalents3 (198) 578 304 985 402 (163)
Interest expense 745 694 689 793 672 588
Interest expense, operating lease liability4 664 607 483 458 450 533
Adjusted interest expense 1,409 1,301 1,172 1,251 1,122 1,121
Tax benefit of interest expense5 (296) (273) (246) (263) (236) (235)
Adjusted interest expense, after taxes6 1,113 1,028 925 988 887 886
Interest income (370) (198) (53) (52) (55) (59)
Investment income, before taxes (370) (198) (53) (52) (55) (59)
Tax expense (benefit) of investment income7 78 42 11 11 12 12
Investment income, after taxes8 (292) (156) (42) (41) (43) (47)
Net operating profit after taxes (NOPAT) 4,954 5,421 5,014 7,163 2,531 1,216

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses.

3 Addition of increase (decrease) in equity equivalents to net income.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 17,516 × 3.79% = 664

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,409 × 21.00% = 296

6 Addition of after taxes interest expense to net income.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 370 × 21.00% = 78

8 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. FedEx Corp. NOPAT increased from 2022 to 2023 but then decreased significantly from 2023 to 2024.

Cash Operating Taxes

FedEx Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Provision for income taxes 1,505 1,391 1,070 1,443 383 115
Less: Deferred income tax expense (benefit) (162) 446 322 802 348 (85)
Add: Tax savings from interest expense 296 273 246 263 236 235
Less: Tax imposed on investment income 78 42 11 11 12 12
Cash operating taxes 1,885 1,177 983 893 259 423

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. FedEx Corp. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

FedEx Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Current portion of long-term debt 68 126 82 146 51 964
Long-term debt, less current portion 20,135 20,453 20,182 20,733 21,952 16,617
Operating lease liability1 17,516 17,753 16,930 15,583 14,118 15,238
Total reported debt & leases 37,719 38,332 37,194 36,462 36,121 32,819
Common stockholders’ investment 27,582 26,088 24,939 24,168 18,295 17,757
Net deferred tax (assets) liabilities2 3,169 3,326 2,886 2,509 1,815 1,481
Allowance for credit losses3 436 472 340 358 175 121
Equity equivalents4 3,605 3,798 3,226 2,867 1,990 1,602
Accumulated other comprehensive (income) loss, net of tax5 1,359 1,327 1,103 732 1,147 865
Adjusted common stockholders’ investment 32,546 31,213 29,268 27,767 21,432 20,224
Invested capital 70,265 69,545 66,462 64,229 57,553 53,043

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to common stockholders’ investment.

5 Removal of accumulated other comprehensive income.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. FedEx Corp. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Cost of Capital

FedEx Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 74,517 74,517 ÷ 109,964 = 0.68 0.68 × 16.59% = 11.24%
Long-term debt, including current maturities3 17,931 17,931 ÷ 109,964 = 0.16 0.16 × 3.50% × (1 – 21.00%) = 0.45%
Operating lease liability4 17,516 17,516 ÷ 109,964 = 0.16 0.16 × 3.79% × (1 – 21.00%) = 0.48%
Total: 109,964 1.00 12.17%

Based on: 10-K (reporting date: 2024-05-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 63,985 63,985 ÷ 100,038 = 0.64 0.64 × 16.59% = 10.61%
Long-term debt, including current maturities3 18,300 18,300 ÷ 100,038 = 0.18 0.18 × 3.50% × (1 – 21.00%) = 0.51%
Operating lease liability4 17,753 17,753 ÷ 100,038 = 0.18 0.18 × 3.42% × (1 – 21.00%) = 0.48%
Total: 100,038 1.00 11.59%

Based on: 10-K (reporting date: 2023-05-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 56,641 56,641 ÷ 92,839 = 0.61 0.61 × 16.59% = 10.12%
Long-term debt, including current maturities3 19,268 19,268 ÷ 92,839 = 0.21 0.21 × 3.50% × (1 – 21.00%) = 0.57%
Operating lease liability4 16,930 16,930 ÷ 92,839 = 0.18 0.18 × 2.85% × (1 – 21.00%) = 0.41%
Total: 92,839 1.00 11.10%

Based on: 10-K (reporting date: 2022-05-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 78,820 78,820 ÷ 118,028 = 0.67 0.67 × 16.59% = 11.08%
Long-term debt, including current maturities3 23,625 23,625 ÷ 118,028 = 0.20 0.20 × 3.40% × (1 – 21.00%) = 0.54%
Operating lease liability4 15,583 15,583 ÷ 118,028 = 0.13 0.13 × 2.94% × (1 – 21.00%) = 0.31%
Total: 118,028 1.00 11.92%

Based on: 10-K (reporting date: 2021-05-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 42,995 42,995 ÷ 80,398 = 0.53 0.53 × 16.59% = 8.87%
Long-term debt, including current maturities3 23,285 23,285 ÷ 80,398 = 0.29 0.29 × 3.60% × (1 – 21.00%) = 0.82%
Operating lease liability4 14,118 14,118 ÷ 80,398 = 0.18 0.18 × 3.19% × (1 – 21.00%) = 0.44%
Total: 80,398 1.00 10.14%

Based on: 10-K (reporting date: 2020-05-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 44,283 44,283 ÷ 77,382 = 0.57 0.57 × 16.59% = 9.49%
Long-term debt, including current maturities3 17,862 17,862 ÷ 77,382 = 0.23 0.23 × 3.50% × (1 – 21.00%) = 0.64%
Operating lease liability4 15,238 15,238 ÷ 77,382 = 0.20 0.20 × 3.50% × (1 – 21.00%) = 0.54%
Total: 77,382 1.00 10.67%

Based on: 10-K (reporting date: 2019-05-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

FedEx Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1 (3,595) (2,641) (2,366) (493) (3,302) (4,445)
Invested capital2 70,265 69,545 66,462 64,229 57,553 53,043
Performance Ratio
Economic spread ratio3 -5.12% -3.80% -3.56% -0.77% -5.74% -8.38%
Benchmarks
Economic Spread Ratio, Competitors4
Uber Technologies Inc. -0.74% -70.94% -20.12% -47.25% -55.76%
Union Pacific Corp. -0.81% 1.03% 0.18% -1.40% 0.00%
United Parcel Service Inc. 4.41% 15.59% 21.37% -8.73% 2.72%

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -3,595 ÷ 70,265 = -5.12%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. FedEx Corp. economic spread ratio deteriorated from 2022 to 2023 and from 2023 to 2024.

Economic Profit Margin

FedEx Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1 (3,595) (2,641) (2,366) (493) (3,302) (4,445)
Revenue 87,693 90,155 93,512 83,959 69,217 69,693
Performance Ratio
Economic profit margin2 -4.10% -2.93% -2.53% -0.59% -4.77% -6.38%
Benchmarks
Economic Profit Margin, Competitors3
Uber Technologies Inc. -0.31% -36.36% -18.53% -89.23% -80.67%
Union Pacific Corp. -2.06% 2.46% 0.49% -4.18% 0.00%
United Parcel Service Inc. 2.21% 6.96% 9.75% -3.42% 1.33%

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -3,595 ÷ 87,693 = -4.10%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. FedEx Corp. economic profit margin deteriorated from 2022 to 2023 and from 2023 to 2024.