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FedEx stock dips 4% despite CEO modelling double-digit returns

on Jun 29, 2022
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  • FedEx Corporation is hosting its "Investor Day" in Memphis today.
  • CEO discusses the new growth plan on an exclusive CNBC interview.
  • FedEx stock is currently down nearly 15% versus the start of the year.

Shares of FedEx Corporation (NYSE: FDX) are down 5.0% this morning even after the transport company said it was targeting annualised total shareholder return of up to 22% through fiscal 2025.

CEO Subramaniam outlines new growth plan

The American multinational is hosting its “Investor Day” in Memphis on Wednesday. Discussing the new growth plan in an exclusive interview with CNBC, CEO Raj Subramaniam said:

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We’ll drive operating margins to double digits, we’ll balance revenue growth, and we’ll improve our asset intensity and ROIC of 200 basis points, overall drive a total shareholder return of 18% to 22%.

Earlier this month, FedEx announced a more than 50% increase in its quarterly dividend to $1.15 a share. The stock is down nearly 15% for the year.

 Are labour pressures still a headwind?

The $60 billion company also confirmed that it’s committed to an EPS growth of 14% to 19% through fiscal 2025. According to CEO Subramaniam, FedEx is well-positioned to look beyond labour pressures.

We have taken care of inefficiencies. The wage rate is now in our numbers. We have dealt with it head-on. So, we’re going to improve our productivity, improve our revenue quality, and drive improved margins.

Last week, FedEx said its Freight revenue per shipment was up 28% in the fiscal fourth quarter that, as per the chief executive, speaks to the vital role the company plays in international trade and eCommerce.