What is FDX's DCF valuation?

FedEx Corp (FDX) DCF Valuation Analysis

Executive Summary

As of June 12, 2025, FedEx Corp has a Discounted Cash Flow (DCF) derived fair value of $304.73 per share. With the current market price at $224.00, this represents a potential upside of 36.0%.

Key Metrics Value
DCF Fair Value (5-year) $303.83
DCF Fair Value (10-year) $304.73
Potential Upside (5-year) 35.6%
Potential Upside (10-year) 36.0%
Discount Rate (WACC) 6.7% - 8.7%

Financial Performance & Projections

Revenue Trends

Revenue is projected to grow from $87693 million in 05-2024 to $114648 million by 05-2034, representing a compound annual growth rate of approximately 2.7%.

Fiscal Year Revenue (USD millions) Growth
05-2024 87693 3%
05-2025 87711 0%
05-2026 90981 4%
05-2027 93637 3%
05-2028 95509 2%
05-2029 97419 2%
05-2030 99368 2%
05-2031 103105 4%
05-2032 107524 4%
05-2033 110221 3%
05-2034 114648 4%

Profitability Projections

Net profit margin is expected to improve from 5% in 05-2024 to 5% by 05-2034, driven by operational efficiency and economies of scale.

Fiscal Year Net Profit (USD millions) Profit Margin
05-2024 4331 5%
05-2025 4332 5%
05-2026 4493 5%
05-2027 4625 5%
05-2028 4717 5%
05-2029 4811 5%
05-2030 4908 5%
05-2031 5092 5%
05-2032 5310 5%
05-2033 5444 5%
05-2034 5662 5%

DCF Model Components

1. Capital Expenditures (CapEx)

with a 5-year average of $5973 million. Projected CapEx is expected to maintain at approximately 7% of revenue.

2. Depreciation & Amortization

Depreciation is based on an average useful life of 5 years for capital assets.

Fiscal Year D&A (USD millions)
05-2025 6044
05-2026 6158
05-2027 6134
05-2028 6254
05-2029 6601
05-2030 6766

3. Working Capital Requirements

Net working capital is expected to increase gradually, with projected changes affecting free cash flow.

Components Average Days
Days Receivables 43
Days Inventory 8
Days Payables 49

4. Free Cash Flow Projections

Fiscal Year EBITDA Tax CapEx Change in NWC FCF
3M/2025 3064 376 1555 3 1129
2026 12602 1561 6454 64 4522
2027 12766 1607 6642 366 4150
2028 13019 1639 6775 137 4468
2029 13501 1672 6911 127 4791

DCF Valuation Parameters

Key Assumptions

  • Discount Rate (WACC): WACC / Discount Rate (selected: 6.7% - 8.7%)
  • Long-Term Growth Rate: Long-term Growth Rate (selected: 2.0% - 4.0%)
  • Terminal EV/EBITDA Multiple: 7.6x (based on peer average)

Valuation Summary

Valuation Method Fair Price (USD) Potential Upside
5-Year DCF (Growth) 303.83 35.6%
10-Year DCF (Growth) 304.73 36.0%
5-Year DCF (EBITDA) 306.53 36.8%
10-Year DCF (EBITDA) 310.22 38.5%

Enterprise Value Breakdown

  • 5-Year Model: $87,803M
  • 10-Year Model: $88,019M

Investment Conclusion

Is FedEx Corp (FDX) a buy or a sell? FedEx Corp is definitely a buy. Based on our DCF analysis, FedEx Corp (FDX) appears to be significantly undervalued with upside potential of 36.0%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.

Key investment drivers include:

  • Steady revenue growth (2.7% CAGR)

Investors should consider a strong buy at the current market price of $224.00.