Displaying items by tag: fedex

Wednesday, 29 January 2020 10:52

Is FedEx a Buffett Buyout Target?

(New York)

There has been a lot of speculation over the last year that FedEx might be a buyout target. This time last year, everyone thought Amazon would buy the logistics company to beef up its own network. That did not happen. Now the speculation is that it might be on Warren Buffett’s list. Buffett has expressed that he is itching to make an “elephant-sized” acquisition, and FedEx fits the bill in more ways than one. Not only is it huge, but it has a more than $125 bn hoard of cash. Buffett likes simple businesses with good management and large moats, or barriers to entry which prevent competition. FedEx fits the bill perfectly.


FINSUM: This feels like a match made in heaven. Both parties refuse to comment. Hmmmm…

Published in Eq: Value
Friday, 06 September 2019 12:35

UPS and FedEx Set for Big Win with Amazon

(Seattle)

Amazon’s move towards one-day shipping is likely to be a big win for UPS and FedEx, but not in the way you think. A superficial glance might lead one to assume Amazon is going to increase one-day shipping contracts with the logistics providers, but that is not so. Amazon is building out its own network to do so. So how will it help FedEx and UPS’ beat-up stocks? The answer is that other ecommerce companies will need to increase their shipping speeds in order to better compete with Amazon, and in order to do so, they will be paying for a lot more one-day shipping through UPS and FedEx.


FINSUM: This is quite an interesting angle and one that makes a lot of sense. Walmart, Target, and many other big retailers will need to rely on UPS and FedEx to meet the one-day shipping challenge that will be required to stay competitive with Amazon.

Published in Eq: Tech
Friday, 09 August 2019 13:51

The Fedex Amazon Breakup is a Big Opportunity

(Seattle)

Fedex and Amazon are in the middle of an ugly spot. Anyone paying attention over the last few years will be aware of the “frenemy” relationship between Amazon and logistics providers, as the company offers a lot of business but hammers margins and is stealing away business with its own shipping network. Well, Fedex finally said enough is enough and decided against renewing its ground shipping contract with Amazon. Therein lies opportunity, however, as it should offer UPS a lot more business.


FINSUM: This is a bold move by Fedex. We expect it will hit revenue slightly, but probably not wound profits too badly. It could give UPS and USPS a boost.

Published in Eq: Large Cap
Monday, 04 February 2019 11:15

Why Amazon Won’t Buy FedEx

(Seattle)

There has been a lot of speculation lately, including by FINSUM, that Amazon might buy FedEx. FedEx’s share price could be considered cheap, and it would be a bold and strategic move if Amazon is actually committed to building its logistics business. However, Barron’s is today arguing that Amazon will never buy FedEx. The reasons why are two-fold. The first is that the 10.7x p/e ratio is not actually very cheap, and secondly, because Amazon does not really need FedEx’s capabilities, which have less to do with last mile delivery than they do with “upstream sorting”.


FINSUM: The real question here is whether Amazon wants to build up a logistics business in its own right, not just internal capabilities to serve its ecommerce business. If it does, then it is a smart acquisition. However, it would likely face significant anti-trust hurdles.

Published in Eq: Tech
Wednesday, 30 January 2019 10:11

Amazon Should buy FedEx

(Seattle)

That is an eye-opening thought, is it not? Some investors and analysts are arguing that in light of FedEx’s stock being so beat up, Amazon should swoop in and buy the company. Amazon has been building its logistics operations for years, but buying FedEx could give it a big boost if it wants to become a shipping giant. One analyst summarizes it this way, “FedEx is inexpensive at 10.6x and 6.5x forward price-to-earnings and enterprise value to earnings before interest, taxes, depreciation and amortization multiples, respectively … Amazon could make an accretive acquisition of the best global network for a fraction of the cost of building it themselves”.


FINSUM: As mind-boggling as Amazon owning FedEx sounds, this idea appears quite logical and plausible.

Published in Eq: Tech
Page 1 of 2

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…