FedEx Corporation is a global shipping and business services company headquartered in Memphis, Tennessee. It operates four business segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. The analyst recommends holding FedEx stock with a target price of $178.46 based on a discounted cash flow valuation. While FedEx is currently undervalued relative to peers, its upside potential is limited at 2.97% given its current stock price of $173.32. The target entry point is $152.53, representing a 17% correction from the current price.

1. FedEx Corporation
“THE WORLD ON TIME”
NYSE: FDX
Stock Pitch Competition
Saturday, March 14th, 2015
Ashwin Anant: Equity Analyst at Brock Finance & Investment
Group

2. Stock Quote
Data
Friday, March 13th,
2015
Current Price $173.32 (6% 52WH)
52 Week High $183.51
52 Week Low $130.64
TTM P/E 22.90x
Market Cap $49 Billion
Dividend Yield 0.45%
Outstanding Shares 283.31 M
LTM EPS $7.93
Beta 1.15
CEO: Frederick W. Smith
• Founded company in 1971
• Served as board of governors of many
public companies
• Recipient of Global Leadership Award
Executive VP & CFO: Alan B. Graf, Jr.
• Joined the company as a financial analyst
in 1980
• Served as executive VP and CFO of
FedEx Express until 1998
T, Michael Glenn: Executive VP,
Market Development and Corporate
Communications
• Joined FedEx in 1981
• Serves president and Co-CEO of FedEx
Corporate services and is on the
Executive Committee
Overview Industry Analysis Valuation Appendix
Management
Headquarters: Memphis,
Tennessee
Recommendation: Hold
Target Price: $178.46
Target Entry Point: $152.53

3. Company Overview
Market leader in international express transportation and
delivery; First founded in 1971 as an express transportation
company (FedEx Express)
Evolved into a large-cap holding company which owns and
operates four business segments; FedEx Express, FedEx Ground,
FedEx Freight, FedEx Services
Incorporated in 1998 in Delaware as FedEx Corporation; FedEx
Trade Networks has expanded to 13 new countries in Europe,
Africa, Asia and Latin America
Provides logistics services, package delivery and supply chain
management to over 220 countries in the world that make up
90% of the world’s GDP
Overview Industry Analysis Valuation Appendix

4. CoreBusiness/OperatingSegments
Overview Industry Analysis Valuation Appendix
Employs 55000 vehicles including 650 aircraft
Provides door-to-door delivery service, time-definite delivery
Offers temperature controlled delivery, overnight delivery & urgent delivery
Operates 42000 vehicles owned by third-parties, and 44,000 company owned
trailers
Transitioned to the ISP business model to lower liability, add new routes
FedEx Smartpost delivers low-weight, cost efficient packages using USPS
Serves 100% of all US residential locations and businesses, offers money-back
guarantees
Owns 62,000 vehicles
Provides the fastest LTL service in the North American market
Improves cost and time efficiency through FedEx electronic solutions
Provides sales, marketing, IT solutions, and administrative services
Offers FedEx Mobile and FedEx Office apps allow users to track their product
shipping status
Pack Plus provides customized packaging and shipping

5. Macro-economic Catalysts
• Globalization
• Slow growth in emerging markets still outpaces
developed nations
• E-commerce
• E-commerce sales made up 6.5% of total retail
sales in 2014, up from 5.8% in 2013
• E-commerce sales increased by 15.4% in 2014
• Technology & Real-time Data
• Website & mobile app enables shipping tracking
in real time data & customization of shipping
needs
• Innovation in Inventory Management
• Just-in-time purchasing has improved time and
cost efficiency in supply chain management
Overview Industry Analysis Valuation Appendix
Source: U.S. Department of Commerce- US
Census Bureau News
World Bank:
GDP Growth (%)
2010 2011 2012 2013
United States 2.5 1.6 2.3 2.2
Canada 3.4 2.5 1.7 2.0
China 10.4 9.3 7.7 7.7
India 10.3 6.6 4.7 5.0
Source: World Bank

6. Strengths
Strong brand and global presence
Experienced Management team
Emphasis on customer loyalty initiatives; e.g., 15%
discount for customers with FedEx online account
Track record of quality, timely service
Weaknesses
Seasonality of business performance
FedEx lags behind UPS in terms of size and market
share
Reliance on US market and domestic demand
Opportunities
Seven year deal with US Postal Service to boost
revenue growth
Crude Oil Prices have slashed by 50%
Sponsorship of PGA Golf and NFL sporting events
Inflation will help boost consumer spending
Acquisitions
Threats
Strong US Dollar could negatively impact profits
Subject to posting regulations and customs
restrictions when shipping internationally
Shift in demand from Priority shipping to cheaper
Economy shipping
Low fuel prices could result in lower offsetting fuel
surcharges
Indirect competition (Amazon Prime Air)
Situational Analysis
Overview Industry Analysis Valuation Appendix

7. Qualitative Comparison:FEDEXVS UPS
• Segregation of business operations
allows each business segment to be
managed independently which improves
operating efficiency
• Handles an average of 9 Million
packages per day
• Strong balance sheet with lower leverage
• Potential for dividend increases & CAPEX
with strong operating cash flow
• Operates 650 aircraft fleet
• Integrates all types of delivery service
within one network as opposed to
separate segments
• Handles an average of 16 Million
packages per day
• Their 2.68% dividend may not be
sustainable with their current debt
levels at over 292% of operating cash
flow
• Operates 531 aircraft fleet
• Less foreign exposure (25% international
revenues, compared to 30% for FedEx)
Overview Industry Analysis Valuation Appendix

8. Valuation: Discounted Cash Flow
Overview Industry Analysis Valuation Appendix
Projection Period
2015 E 2016 E 2017 E 2018 E 2019 E
Sales 47,389 49,284 51,254 53,048 54,905
% growth 4.00% 4.00% 4.00% 3.50% 3.50%
Less: Cost of Revenue 13,070 13,593 14,137 14,631 15,143
Gross Profit 34,318 35,690 37,117 38,417 39,761
% Margin 72.42% 72.42% 72.42% 72.42% 72.42%
Less: Operating Expenses 28,044 29,165 30,332 31,393 32,492
EBITDA 6,274 6,525 6,786 7,023 7,269
% Margin 13.24% 13.24% 13.24% 13.24% 13.24%
Depreciation & Amortization 2,690 2,809 2,921 3,024 3,130
EBIT 3,584 3,716 3,864 4,000 4,140
% margin 7.56% 7.54% 7.54% 7.54% 7.54%
Taxes 1,326 1,375 1,430 1,480 1,532
Earnings before interest after taxes 2,258 2,341 2,435 2,520 2,608
Plus: Depreciation & Amortization 2,690 2,809 2,921 3,024 3,130
Plus: Other Non-cash Expenses 861 896 931 964 998
Less: Capital Expenditures 3,933 4,091 4,254 4,403 4,557
Less: Change in NWC 250 -49 -50 -46 -48
Unlevered Free Cash Flow 2,126 1,907 1,983 2,059 2,131
WACC
Discount Period 1.0 2.0 3.0 4.0 5.0
Discount Factor 0.93 0.86 0.80 0.74 0.69
Present Value of Free Cash Flow 1,975 1,645 1,589 1,532 1,473

9. Overview Industry Analysis Valuation Appendix
Debt 4,735 Cost of Equity (CAPM):
Equity 15,563
Risk Free Rate (Avg Daily Yield for 2014 5-
year T-bills) 1.64%
Levered Beta 1.15
Debt-to-Cap 23.33% Risk Premium 6%
Equity-to-Cap 76.67% Size Premium 1.20%
D/E 30.42% Cost of Equity 9.77%
Cost of Debt 2.01% WACC 7.66%
Tax Rate 36.60%
After-tax cost of
Debt 0.73%
Cumulative Present Value of
FCF 8,214.23 Enterprise Value $53,447.5
Less: Total Debt 4,735.00
Terminal Value Less: Preferred Securities 0.00
Terminal Year EBITDA (2018E) 7,269.28 Less: Noncontrolling Interest 0.00
Exit Multiple 9.0x
Plus: Cash and Cash
Equivalents 2,266.0
Terminal Value 65,423.54
Discount Factor 0.69 Implied Equity Value $50,978.5
Present Value of Terminal Value 45,233.23
% of Enterprise Value 84.6%
Implied Diluted Shares
Outstanding 283.31
Enterprise Value 53,447.46 Implied Share Price $179.94

10. ComparableCompaniesData(DataCurrentasofFeb26,2015)
Overview Industry Analysis Valuation Appendix
Category Metric FedEx UPS TNT Express
Deutsche
Post AG
Industry
Average
Performance
Metrics
ROE 14.10% 80.80% -8.50% 24.90% 27.83%
ROA 7.00% 10.20% -4.60% 6.40% 4.75%
Dividend Yield 0.50% 2.60% 1.10% 2.65% 1.71%
Return on Inv. Cap. 9% 23.30% -6.60% Nil 8.57%
Leverage
Debt to Equity 30.42% 168.50% 9.90% 60.30% 67.28%
Cash flow to Debt 45.43% 34.21% N/A N/A
Debt/Total Assets 14.35% 34.12% 5.1% 16.7% 17.57%
Valuation
NTM P/E 17.98 19.71 17.5 17.69 18.22
P/B 3.22 16.45 1.37 4.34 6.35
P/Free Cash Flow 48.3 20.8 Nil 31.1 33.40
EV/EBITDA 8.22 14.7 Nil 9.1 10.67
Liquidity
Current Ratio 1.78 1.9 1.3 1.0 1.50
Quick Ratio 1.69 1.6 1.0 0.8 1.27
A/R Turnover 8.5 10 6.8 7.7 8.25
• FedEx is undervalued by most metrics relative to its major rivals in the logistics industry
• FedEx compares favourably to its peers in terms of liquidity and relatively low leverage ratios

11. Overview Industry Analysis Valuation Appendix
Industry Average
Price/Free Cash Flow
33.40
Free Cash Flow/Share 2.38
Price Target $79.49
Industry Average EV/EBITDA 10.67
2015E EBITDA(based on projected
revenue growth of 4.75%)
7,269
Enterprise Value 77,587
Less: Total Debt 4,735.00
Less: Preferred Securities 0
Less: Noncontrolling Interest 0
Plus: Cash and Cash Equivalents 2,266.00
Implied Equity Value 75,118
Implied Diluted Shares Outstanding 283.31
Implied Share Price 265.15
Industry Average NTM P/E 18.22
NTM Consensus Target EPS 9.9
Price Target 180.38

12. UPSIDE: 2.97% (As of March 13th, 2015: Price = $173.32)
RECOMMENDATION: HOLD
70%
Price Target:
$178.46
DCF Price Target:
$179.94
EV/EBITDA Price Target:
$265.15
P/E Price Target:
$180.38
P/Free Cash Flow Price Target:
$79.49
Weightage Upside
70% 3.90%
10% 53.10%
10% 4.15%
10% -54.10%
Overview Industry Analysis Valuation Appendix

13. Forward looking Strategies
• Meet their $8.00-$9.50 EPS target for the year ended May 31,
2015
• Direct their CAPEX spending towards aircraft modernization,
fuel-efficient vehicles, acquisitions
• Use technology to speed up package sorting and delivery
processes
• Price parcels on a dimensional-weight basis
• Cater to vertical industries such as automobile and healthcare
• Continue to leverage their brand presence and user-friendly
services to retain customer loyalty
Overview Industry Analysis Valuation Appendix

14. FedEx has beat the S&P 500 by 17% points over the last
year
Hold & Buy after 17% correction in stock price
Target Entry Point = $178.46/1.17= $152.53
Overview Industry Analysis Valuation Appendix
Source:
http://www.barchart.com/chart.php?sym=FDX&t=BAR&size=M&v=1&g=1&p=D&d=X&qb=1&style=technical&tem
plate=

15. Thank You

16. Financial Performance
2012 2013 2014 Q2 2015 (YTD)
Total Revenue 42,680 44,287 45,567 23,623
Operating Expenses 39,494 41,736 42,121 21,623
Operating Income 3,186 2,551 3,446 2,000
Other Income -45 -96 -157 -92
Income before Tax 3,141 2,455 3,289 1,908
Income Tax 1,109 894 1,192 686
Net Income $ 2,032 $ 1,561 $ 2,097 $ 1,222
Diluted EPS $ 6.41 $ 4.91 $ 6.75 $ 4.24
Weighted Average
Common Shares 315 315 307 284
Overview Industry Analysis Valuation Appendix
Sensitivity Analysis
WACC
Price Target79.9 5.66% 6.66% 7.66% 8.66% 9.66%
7.0 158.28 151.18 144.46 138.10 132.06
8.0 177.76 169.77 162.20 155.03 148.24
EV/EBITDA 9.0 197.25 188.35 179.94 171.97 164.42
10.0 216.73 206.94 197.68 188.91 180.60
11.0 236.21 225.53 215.42 205.85 196.78

17. Source: FedEx 2014 10k Annual
Report, Pg. 30
59%25%
13% 3%
RevenueBreakdown
FedEx Express
FedEx Ground
FedEx Freight
FedEx Services

18. SELECTED STATISTICS 2012 2013 2014 Q2 YTD 2015
Operating Margin 7.5% 5.8% 7.6% 8.5%
Pretax Margin 7.4% 5.5% 7.2% 8.1%
Return on Assets3 7.1% 4.9% 6.3% 7.0%
Return on Equity3 13.6% 9.7% 12.8% 14.1%
Dividends Paid Per Common Share $ 0.52 $ 0.56 $ 0.60 $ 0.40
–
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
%
Performance Metrics
Return on Equity
Operating Margin
Year
Return on Assets
Overview Industry Analysis Valuation Appendix
0
1000
2000
3000
4000
5000
CAPEX
CAPEX Spending
CAPEX($M)
FY Ended
2010 2011 2012 2013 2014

19. Overview Industry Analysis Valuation Appendix
$ 26,515 $ 27,171 $ 27,121
9,573 10,578 11,617
5,282 5,401 5,757
1,671 1,580 1,536
–
$ 5,000
$ 10,000
$ 15,000
$ 20,000
$ 25,000
$ 30,000
2012 2013 2014
FedEx Express FedEx Ground FedEx Freight FedEx Services
2012-2014 Revenues by Segment
Revenue($M)
0
1000
2000
3000
4000
5000
6000
7000 EBITDA
FY Ended
EBITDA($M) EBITDA
0
1000
2000
3000
4000
5000
6000
2010 2011 2012 2013 2014
$M
As at Year End
Cash
Debt

20. Overview Industry Analysis Valuation Appendix
FedEx Express
Annual Shipment Statistics
FY 2012 – FY 2015
FY 2012 FY 2013 FY 2014
Q2 YTD
FY15
AVG DAILY VOLUME / POUNDS
Average Daily Package Volume
(000s):
U.S. Overnight Box 1,146 1,134 1,164 1,235
U.S. Overnight Envelope 586 574 538 524
Total U.S. Overnight 1,732 1,708 1,702 1,759
U.S. Deferred 845 835 869 880
Total U.S. Packages 2,577 2,543 2,571 2,639
International Priority 421 421 410 417
International Economy 138 155 170 175
Total International Export
Packages 559 576 580 592
International Domestic1 495 785 819 866
Total Avg Daily Packages 3,631 3,904 3,970 4,097
Average Daily Freight Pounds
(000s):
U.S. 7,487 7,612 7,854 7,676
International Priority 3,303 3,048 2,922 2,887
International Airfreight 1,171 1,066 798 650
Total Avg Daily Freight Pounds 11,961 11,726 11,574 11,213

21. Overview Industry Analysis Valuation Appendix
FY 2012 FY 2013 FY 2014
Q2 YTD
FY15
FedEx
Ground
Total Package Volume
(000s) 1,000,099 1,076,709 1,165,217 598,076
Average Daily Package Volume
(000s) 3,907 4,222 4,588 4,709
9
Yield (Revenue Per
Package) $ 8.77 $ 8.94 $ 9.10 $ 9.25
Average Daily YOY Volume Growth
Rate 4.3% 8.1% 8.7% 5.4%
FedEx SmartPost
Total Package Volume
(000s) 433,042 522,726 550,745 253,955
Average Daily Package Volume
(000s) 1,692 2,058 2,186 2,000
Yield (Revenue Per
Package) $ 1.81 $ 1.77 $ 1.78 $ 1.87
Average Daily YOY Volume Growth
Rate 18.2% 21.6% 6.2% (7.2%)

22. FedEx Freight
Annual LTL Shipment Statistics
FY 2012 – FY 2015
FY 2012 FY 2013 FY 2014 Q2 YTD FY15
Shipments Per Day
Priority 60,345 59,280 62,868 69,526
Economy 24,511 26,370 27,687 29,230
Total shipments per day 84,856 85,650 90,555 98,756
Weight Per LTL Shipment (lbs)
Priority 1,202 1,237 1,262 1,251
Economy 1,045 990 1,000 1,012
Composite Weight per
LTL Shipment 1,156 1,161 1,182 1,180

23. • Analyst Coverage
• ACCOUNTABILITY
• ARGUS RESEARCH
• B OF A M L
• BAIRD R W
• BARCLAYS CAPITA
• BB & T CAPITAL
• DEUTSCHE BK SEC
• EDWARD JONES
• MACQUARIE CAPIT
• MORGAN STANLEY
• OPPENHEIMER HLD
• RAYMOND JAMES
• STIFEL NICOLAUS
• UBS
• WILLIAM BLAIR
Average Consensus Price Target: $192.50
12 Analysts Rated “Strong Buy”
7 Analysts Rated “Hold”
Overview Industry Analysis Valuation Appendix