How to Buy FedEx Shares UK – with 0% Commission

FedEx Corporation is one of the world’s largest express delivery service company that delivers roughly six million packages in a year, and employs more than 400k people as of 2019. This company has been in the industry for quite a time now, but from the start of the year, FedEx’s stock has been extremely volatile and seen big price swings in both directions. At present, the FedEx share price is up more than 80% so far this year.

If you are thinking of investing in FedEx shares, this guide can help you.  We’ll take a close look at the FedEx stock price, and decide whether it is the right investment for you right now. We also suggest top UK stockbrokers that offer you to trade shares of FedEx and show you how to buy FedEx shares online in the UK.

Step 1: Find a UK Stock Broker That Offers FedEx Shares

FedEx Corp shares trade on the New York Stock Exchange (NYSE) since the company went public in 1978. This means that if you want to invest in FedEx, you’ll have to find a UK stockbroker that allows users to buy and sell US shares. The good news is that finding a UK brokerage firm that enables users to trade US shares including shares of FedEx should not be a big problem.

With that in mind, you want to make sure you choose a stockbroker that not only gives you access to US share trading but also maintains a fair commission policy, is heavily regulated, and provides a top-notch trading platform and trading features.

Step 2: Research FedEx Shares

FedEx stock has been on a tear since the Covid-19 pandemic started in March 2020, largely due to the increase in online orders. Eventually, the FedEx stock reached an all-time high of $293.30 on October 20, and so far this year investors have enjoyed a return of nearly 80%. But before you make an investment in FedEx, it’s better to check all parameters and the company’s fundamentals.

To make things clearer, let’s analyze the FedEx share price historical performance and take a look at some of the reasons why FedEx might be a good long term investment.

How Much Are FedEx Shares Worth? FedEx Share Price History

FedEx was founded in 1971 by Frederick W. Smith who serves as the Chief Executive Officer of the company until the present time. The idea of Smith was first introduced when he was a student at Yale University and wrote a term paper explaining the business model for express delivery service. Ironically, his professor rejected the idea and responded: “The concept is interesting and well-formed, but in order to earn better than a ‘C’, the idea must be feasible.” But once Smith graduated from Yale, he then founded FedEx Express and the company was very soon surfing the waves of success.

Two years later in 1973, FedEx Express started its air operations from the Memphis airport with just 20 jet aircraft that delivered packages between 25 US cities. By 1976, the company has reported its first profit of $3.6mn, delivering 19,000 packages per day. By the late 70s and early 80s, FedEx grew rapidly right after it has acquired seven Boeing 727 aircraft and 1 Boeing 737 aircraft. To increase its expansion, FedEx went public in 1978 and by 1983, it reported for the first time revenues of $1bn. In 1998, FedEx acquired the Roadway Package System (RPS), now known as FedEx Ground. Smith’s has promoted the merger between FedEx and RPS in order to create a competitive service for UPS.

Since the early 90s, FedEx shares were trading in a long upward trajectory. However, between 2017-2019, FedEx shares fell by more than 50% despite steady revenue growth. That can be largely attributed to some complications in the FedEx and TNT merger and the termination of the shipping contract with Amazon in 2019.

Like most eCommerce businesses, FedEx had a strange year in 2020. In February, the FedEx share price fell by more than 60%, but since then FedEx has been one of the best performing shares in the market with an outstanding increase in value from its lowest yearly level of $90.49 per share to its all-time high of $287.40 on October 20.

FedEx Share Fundamentals – Market Cap, P/E Ratio and EPS

FedEx Corporation has a market capitalization of around $71bn as of November 2020. Its PE ratio currently stands at nearly 42, meaning investors are willing to pay $40 to claim $1 in earnings of the company. Best of all, FedEx’s EPS growth rate is extremely impressive. In Q3, it has reported an EPS of $4.72, which represents an increase of 66.2% year-over-year. FedEx 2020 annual EPS stands at $4.9, an increase of 141.38% from 2019.

FedEx is not yet providing an earnings forecast for fiscal 2021 year but it raised the capital spending outlook for the next year by $200 million to $5.1 billion in order to increase volume levels.

FedEx Shares Dividend Information

Since 2012, FedEx has been a favorite stock for dividend investors as it is consistently paying quarterly dividends and is expected to continue paying dividends in spite of the uncertainty caused by the Covid-19 pandemic. While FedEx’s 5-year average dividend yield of 1.08% is considered low for some investors, there are high expectations from Wall Street analysts and investors for an increase in FedEx’s earning distribution in 2021 due to growth in revenues in 2020.

Should I Buy FedEx Shares?

FedEx share price has been on a major uptrend since the Covid-19 pandemic has changed the ecommerce world. Not only the company has reached an all-time valuation, but it has also outperformed its main competitors in the industry, UPS and United States Postal Service (USPS). And even though the shares of the American multinational delivery services company has declined from the all-time high in October, we still think there are many reasons why investors and analysts are bullish on this stock.

Outstanding Earnings Results

Over the past year, FedEx has reported truly impressive earnings. In the third quarter of the year, the shipping service giant reported an EPS of $4.87 per share for the Q1 fiscal year of 2021 from $19 billion in sales. That was way above analysts’ expectations of $2.70 in earnings per share on $17.5bn in sales. Moreover, the company has seen an increase from 8.8 million average daily package volume the year-before quarter to 11.6 million this quarter.

Clearly, the Covid-19 pandemic has had a positive impact on FedEx’s revenue growth. Looking ahead, Wall Street analysts predict that the trend is expected to continue, setting an EPS of $11 per share in the fiscal year of 2021.

Partnership with Microsoft

In May 2020, FedEx Corporation and Microsoft announced a collaboration that could ‘transform commerce’ by combining FedEx’s logistics network and Microsoft’s intelligent cloud technology. Although the two mega-companies did not reveal the details of the partnership, this collaboration will be, more than anything, an attempt to team up against Amazon. Moreover, the use of Microsoft technology could potentially improve FedEx’s supply chains and shipping logistics.

FedEx Drone Delivery

You might have heard about the future predictions that drones will be an integral part of online delivery services. So, for investors that are willing to bet on drone delivery technology, FedEx is a great long term investment. In 2019, FedEx Express launched the first commercial drone-delivery service, as well as the first scheduled e-commerce delivery via a drone delivery in the US. As the market for drone package delivery service is set for rapid growth in the next decade, FedEx is one of the top candidates in the race to develop accurate drone delivery systems along with Amazon, Airbus, Boeing, DHL, and Matternet.

FedEx Shares: Buy or Sell?

Overall, FedEx shares could be a good investment opportunity. In fact, the only reason for a pullback in the share price right now can be a Covid-19 vaccine that might end the eCommerce boom. But even in this case, it’s difficult to see FedEx’s share price fall drastically from its current valuation.

Overall, the company is still facing increasing competition from United Parcel Service (UPS) and Amazon. Additionally, there’s a question of whether FDX can perform that well for the long term and whether the eCommerce boom will continue in the next year. Nonetheless, the company’s valuation is actually in line with financials and fundamentals. Though it might seem that FedEx is currently overvalued compared to other package delivery services and competitors in the industry, some analysts think it is actually trading at a discount right now. As such, we still think FedEx is a solid investment with a stop loss rate of 20%-25%.

The Verdict

FedEx is one of the most important shipping services in the world and its share has been on a roll since March 2020. In the near future, we are not likely to see the demand for FedEx services fall drastically. The outlook for the shipping market in the next years is very optimistic, and as such, FedEx is expected to continue its growth in the upcoming years.

FAQs