FedEx outlook upbeat

Upbeat analysis of FedEx earnings report and outlook for 2015.

Besides the EPS forecast, FedEx has also reaffirmed that the company will be spending $4.2 billion in capital expenditure in the coming year, and I believe that the capital expenditure will translate into further margin expansion beyond 2015. The capital expenditure is primarily related to the company’s fleet renewal into a more fuel efficient fleet of aircraft, and this will contribute to margin expansion beyond 2015.
The company has maintained its long-term goal of achieving 10% operating margin and with operating margins surging by 120 basis points in the second quarter, FedEx is well on track to achieve 10% operating margin in the coming years. The $4.2 billion capital expenditure coming next year will be the most significant step towards achieving the 10% operating margin.

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