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Is FedEx (FDX) Stock Undervalued Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

FedEx (FDX) is a stock many investors are watching right now. FDX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 12.66, which compares to its industry's average of 14.77. Over the past year, FDX's Forward P/E has been as high as 15.06 and as low as 10.43, with a median of 13.03.

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We also note that FDX holds a PEG ratio of 1.06. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FDX's industry has an average PEG of 1.44 right now. Within the past year, FDX's PEG has been as high as 1.26 and as low as 0.87, with a median of 1.09.

Another notable valuation metric for FDX is its P/B ratio of 2.40. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. FDX's current P/B looks attractive when compared to its industry's average P/B of 5.32. Within the past 52 weeks, FDX's P/B has been as high as 2.61 and as low as 1.72, with a median of 2.30.

Finally, we should also recognize that FDX has a P/CF ratio of 7.56. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.14. Over the past 52 weeks, FDX's P/CF has been as high as 8.30 and as low as 5.68, with a median of 7.58.

These are just a handful of the figures considered in FedEx's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FDX is an impressive value stock right now.

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Zacks Investment Research