FDX – Market expectations are for record-high Uniform ROA, but management concerns about EPS, volume, and revenue growth imply this may be unwarranted

• FedEx Corporation (FDX:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 1.5x Uniform P/B, implying bullish expectations for the firm. However, given the unsustainability of favorable economics, and management concerns about EPS, volume, and revenue growth, this may be unwarranted
• Specifically, recent improvements in Uniform ROA have been driven by significant declines in fuel prices, and it is unlikely that FDX is able to sustain improved profitability even if fuel prices stay low. Additionally, management appears concerned about the sustainability of adjusted EPS growth, package volume growth, and Freight segment revenue growth. Should the firm fail to drive Uniform ROA to record-highs, as management sentiment suggests, multiple compression and equity downside would be warranted