Benzinga - by Benzinga Insights, Benzinga Staff Writer.
A significant insider transaction involving the exercise of company stock options was reported on April 9, by Frederick W Smith, Executive Chairman at FedEx (NYSE:FDX), as per the latest SEC filing.
What Happened: A notable Form 4 filing on Tuesday with the U.S. Securities and Exchange Commission revealed that Smith, Executive Chairman at FedEx, exercised stock options for 159,485 shares of FDX, resulting in a transaction value of $20,564,793.
FedEx shares are trading down 2.2% at $270.3 at the time of this writing on Wednesday morning. Since the current price is $270.3, this makes Smith's 159,485 shares worth $20,564,793.
Delving into FedEx's Background FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2023, which ended May 2023, FedEx derived 47% of revenue from its express division, 37% from ground, and 11% from freight, its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth-largest global parcel delivery provider.
A Deep Dive into FedEx's Financials Revenue Challenges: FedEx's revenue growth over 3 months faced difficulties. As of 29 February, 2024, the company experienced a decline of approximately -1.94%. This indicates a decrease in top-line earnings. When compared to others in the Industrials sector, the company excelled with a growth rate higher than the average among peers.
Evaluating Earnings Performance:
- Gross Margin: With a high gross margin of 20.88%, the company demonstrates effective cost control and strong profitability relative to its peers.
- Earnings per Share (EPS): FedEx's EPS is notably higher than the industry average. The company achieved a positive bottom-line trend with a current EPS of 3.55.
In-Depth Valuation Examination:
- Price to Earnings (P/E) Ratio: The current P/E ratio of 15.95 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.
- Price to Sales (P/S) Ratio: The Price to Sales ratio is 0.8, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.
- EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Indicated by a lower-than-industry-average EV/EBITDA ratio of 9.02, the company suggests a potential undervaluation, which might be advantageous for value-focused investors.
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The Importance of Insider Transactions Insider transactions, although significant, should be considered within the larger context of market analysis and trends.
Considering the legal perspective, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, according to Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.
Pointing towards optimism, a company insider's new purchase signals their positive anticipation for the stock to rise.
Nevertheless, insider sells may not necessarily indicate a bearish view and can be influenced by various factors.
Exploring Key Transaction Codes Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates grant, award or other acquisition of securities from the company.
Check Out The Full List Of FedEx's Insider Trades.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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