Amazon Rival May Have Hit a Top

FedEx is slated to report earnings next week on Dec. 17

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FedEx Corporation (NYSE:FDX) is an American delivery company that provides its services to more than 220 countries and territories. FedEx is one of the largest couriers, alongside its biggest competitor, United Parcel Service (UPS), and its more recent rival, Amazon.com (AMZN). FedEx has two enormous news drops this month: an acquisition announced earlier this month and an earnings report due out next Thursday.

On Dec. 2, FedEx announced its agreement to acquire ShopRunner, an e-commerce platform that directly connects brands and merchants with online shoppers. This acquisition would expand FedEx’s e-commerce portfolio and the company to better compete with Amazon.

So far this calendar year, FedEx stock has surged 95%, and has easily made an name as a coveted stay-at-home stock. FDX growth in 2020 has been ultimately fueled by the Covid-19 pandemic, as consumers have turned significantly toward delivery services during quarantines and shutdowns rather than in-person shopping. Earlier this year, FedEx stock reached a 52-week low $88.69, but has since recovered an outstanding 240%.

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FedEx stock has beat expectations on two of its four most recent earnings reports. In the fourth quarter of 2019, FedEx stock missed earnings expectations by $0.25, reporting an earnings per share (EPS) of $2.51. In the first quarter of 2020, FDX dropped its EPS to $1.41, meeting expectations for this quarter. FedEx stock saw an increased EPS for the second quarter of 2020. The company reported an EPS of $2.53, beating Wall Street's expectations by a significant margin of $1.01. In its most recent quarter, FDX blew away all expectations. FedEx stock reported an EPS of $4.87, beating expectation by $2.18, or 81%. For its upcoming earnings report next week, FedEx stock is expected to report an EPS of $3.86.

FDX has a forward dividend of $2.60 and a dividend yield of 0.88%. The last dividend FedEx stock paid was for $0.65. FedEx has consistently grown its dividend since 2003.

Overall, FedEx’s revenue growth this year will likely prove to be unsustainable as the release of a vaccine should tamper down consumer fears of in-person shopping. As a result, the company also might not be able to sustain Fedex's current stock price. FedEx stock currently trades at a price-earnings ratio of 44.38, which is unusually high. The company’s recent move to advance its e-commerce portfolio is promising, but FedEx will still face an uphill battle against the strength of Amazon.

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