A first look at FedEx, United Parcel Service, and Expeditors International of Washington

When it comes to scanning the markets for new ideas, among my favorites are blue-chip stocks that hit 52-week lows...

That's what happened to transportation/logistics/delivery giant FedEx (FDX) last week after it reported earnings and lowered guidance for 2025.

This gets me interested enough for my usual quick "first look." And while I'm at it, I figured I would check out two other companies in the space to see if they also warrant a further look...

1) FedEx pioneered the overnight delivery business – so much so that its name is a verb: "I'll FedEx that to you."

It was a strong growth stock for decades, but today sits at a level it first reached seven years ago – as you can see in this stock chart going back to 2000:

As always, I look first to the long-term trends in revenue and net income:

FedEx has grown substantially over time, but its profits have been quite cyclical. There was a big surge in both revenue and net income during the pandemic, but now they're off their highs. And we can see why the stock has been largely flat since 2018, as profits are actually down a bit.

As of yesterday's close, FedEx has a $58 billion market cap and $32 billion of net debt, giving it a $90 billion enterprise value ("EV"). It has $88 billion in trailing revenue, so it's trading at roughly 1 times EV to revenue. And, at yesterday's closing price of $242.32, it's trading at about 13.4 times this year's expected earnings of $18.13 per share. FedEx also sports a roughly 2.3% dividend yield.

2) Up next is United Parcel Service (UPS), whose brown trucks are everywhere...

However, the stock has been a dismal underperformer. It has barely doubled since the company went public in 1999 – and it has been cut in half since it reached an all-time high three years ago:

As with most companies, the stock has followed the earnings – growing very little for the first two decades after the initial public offering ("IPO"), soaring during the pandemic, and coming right back to earth in the aftermath:

As of yesterday's close, UPS has a $98 billion market cap and $19 billion of net debt, giving it a $117 billion EV. It has $91 billion in trailing revenue, so it's trading at roughly 1.3 times EV to revenue. At yesterday's closing price of $115.80, it's trading at about 14.7 times this year's expected earnings of $7.87 per share.

I'm surprised that UPS trades at higher valuation multiples than FedEx, but I think that's mostly explained by its high 5.7% dividend yield.

3) Lastly, let's take a look at a very different type of logistics company: Expeditors International of Washington (EXPD)...

The company arranges deliveries of various goods all over the world, but doesn't own planes, ships, or trucks – so it has a much less capital-intensive business model.

EXPD was once a market darling – I remember it from back in the early days of managing a hedge fund – but it got way ahead of itself in 2006, trading above 75 times forward earnings, which resulted in a sharp decline and the stock going nowhere for a dozen years as earnings caught up with the stock.

Then, like FDX and UPS, EXPD quickly doubled during the pandemic... but unlike them, the stock has held up better in the aftermath. Here's the stock chart going back to 2000:

Though EXPD has been roughly flat for the past few years, we can see why it has held up better than FedEx and UPS – both earnings and profits were up last year:

As of yesterday's close, EXPD has a roughly $16.3 billion market cap and $600 million of net cash, giving it a $15.7 billion EV. It has about $10.6 billion in trailing revenue, so it's trading at roughly 1.5 times EV-to-revenue. Meanwhile, at yesterday's closing price of $117.87, the stock is trading at about 21.3 times this year's expected earnings of $5.53 per share. It also has a 1.2% dividend yield.

In conclusion, at first glance, without doing a deeper dive into their financials and businesses, I'm not excited about any of these three...

FedEx and UPS haven't been great long-term performers... and their stocks, though modestly valued, aren't exactly cheap. I like EXPD's business and performance better, but this is reflected in the higher valuation.

If only I could combine EXPD's business with FDX's multiple and UPS's 50% decline in share price!

But that's OK – 95% to 99% of the time (depending on the market environment), I don't get excited enough by the stocks I take a preliminary 15-minute look at to warrant even a one-hour analysis, much less a deep dive.

I don't get discouraged – and nor should you. Successful investing requires sifting through a lot of gravel to find the occasional nugget of gold.

That said, if you disagree with my takes today and think one – or more – of these stocks is interesting, send me an e-mail by clicking here and tell me why... I'm always interested in hearing additional perspectives from my smart readers that might get me to rethink my opinions!

Best regards,

Whitney