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<blockquote data-quote="fessup" data-source="post: 1036438" data-attributes="member: 43558"><p><a href="http://www.istockanalyst.com/finance/story/6077466/fedex-fdx-investor-day-preview-what-to-watch-for" target="_blank">Fedex (FDX) Investor Day Preview: What To Watch For?</a></p><p></p><p>Quote</p><p>"We continue to see material cost opportunities as a result of expected actions which include: voluntary employee severance, aircraft retirement, head count reductions, and directing parcels to Ground," Deutsche Bank analyst Justin Yagerman said in a note to clients.</p><p></p><p>FedEx can reduce head count through attrition with its rank and file, and expect some additional reductions from retirement and voluntary buy outs. It has been in the process of "significant actions" to reduce costs to better match anticipated demand at Express. The cost savings should aid margin expansion at express despite a soft economic backdrop.</p><p></p><p>...</p><p>On the flip side, if the company if the company fails to announce meaningful cost savings at the upcoming investors and lenders' meeting, then it could invite trouble.</p><p></p><p>"The Street has patiently waited for over six months as expectations have grown (we believe the current bogey is $500 million of annual cost savings from the express initiatives). The mere parking of capacity or accelerated aircraft retirements will not be enough to satisfy buy side expectations, in our opinion," the analyst noted.</p><p></p><p>FedEx should convince investors that it is serious about improving returns, enhancing free cash flow generation, and has a viable plan to increase the company's earnings power. The failure to demonstrate a long-term strategy that incorporates these items would likely impair the company's valuation multiple. FedEx is trading 12.8 times its full-year consensus earnings estimate versus peer United Parcel Service's (NYSE: UPS : 73.1, 0.13) 15.5 times.</p><p></p><p>Unquote</p></blockquote><p></p>
[QUOTE="fessup, post: 1036438, member: 43558"] [URL="http://www.istockanalyst.com/finance/story/6077466/fedex-fdx-investor-day-preview-what-to-watch-for"]Fedex (FDX) Investor Day Preview: What To Watch For?[/URL] Quote "We continue to see material cost opportunities as a result of expected actions which include: voluntary employee severance, aircraft retirement, head count reductions, and directing parcels to Ground," Deutsche Bank analyst Justin Yagerman said in a note to clients. FedEx can reduce head count through attrition with its rank and file, and expect some additional reductions from retirement and voluntary buy outs. It has been in the process of "significant actions" to reduce costs to better match anticipated demand at Express. The cost savings should aid margin expansion at express despite a soft economic backdrop. ... On the flip side, if the company if the company fails to announce meaningful cost savings at the upcoming investors and lenders' meeting, then it could invite trouble. "The Street has patiently waited for over six months as expectations have grown (we believe the current bogey is $500 million of annual cost savings from the express initiatives). The mere parking of capacity or accelerated aircraft retirements will not be enough to satisfy buy side expectations, in our opinion," the analyst noted. FedEx should convince investors that it is serious about improving returns, enhancing free cash flow generation, and has a viable plan to increase the company's earnings power. The failure to demonstrate a long-term strategy that incorporates these items would likely impair the company's valuation multiple. FedEx is trading 12.8 times its full-year consensus earnings estimate versus peer United Parcel Service's (NYSE: UPS : 73.1, 0.13) 15.5 times. Unquote [/QUOTE]
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