FEDEX CORP. $151 - New York symbol FDX

FEDEX CORP. $151 (New York symbol FDX; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 318.0 million; Market cap: $48.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.5%; TSINetwork Rating: Average; www.fedex.com) delivers packages and documents in the U.S. and over 220 other countries through its fleet of 650 planes and over 108,000 trucks and other surface vehicles.

The company recently changed the way it charges for shipping bulky packages by truck. In the past, it based its fee on weight, but it will now charge according to size. This makes it more expensive to ship lighter items that take up significant space, such as diapers. FedEx has also raised its fuel surcharge, which will help offset its rising fuel costs.

Meanwhile, the company earned $2.10 billion in its 2014 fiscal year, which ended May 31, 2014. That’s up 6.1% from $1.98 billion in fiscal 2013. FedEx spent $4.9 billion on share buybacks in its latest fiscal year. As a result, its earnings per share rose 8.3%, to $6.75 from $6.23. Revenue gained 2.9%, to $45.6 billion from $44.3 billion.

Consumers continue to shift away from express air deliveries to cheaper ground-based services. In response, FedEx has cut jobs and invested in more fuel efficient planes. These moves should increase its gross profits by $1.6 billion by the end of fiscal 2016.

The company’s aggressive buybacks have helped increase its share price by 57% in the past year. It now trades at a reasonable 17.3 times the $8.75 a share FedEx will probably earn in fiscal 2015.

In addition, the company recently raised its quarterly dividend by 33.3%, to $0.20 a share from $0.15. The new annual rate of $0.80 yields 0.5%.

FedEx is a buy.

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