FedEx Corp. (NYSE:FDX)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values demonstrate significant volatility over the analyzed period. Starting at $1,216 million in 2019, there was a sharp increase to $2,531 million in 2020, followed by a peak at $7,163 million in 2021. Subsequently, NOPAT declined to $5,014 million in 2022, showed a slight recovery to $5,421 million in 2023, and then decreased again to $4,954 million in 2024. This pattern indicates that while the company experienced a considerable surge in operating profitability in 2021, profitability stalled and slightly weakened in the following years, without returning to the peak level achieved in 2021.

Invested Capital

The invested capital consistently increased over the entire period, growing from $53,043 million in 2019 to $70,265 million in 2024. The growth appears steady and incremental year-over-year, reflecting ongoing capital deployment or asset accumulation by the company. This steady increase suggests sustained investment activities despite the fluctuations observed in operating profit.

Return on Invested Capital (ROIC)

The ROIC followed a trend roughly aligned with NOPAT changes, beginning at a low 2.29% in 2019. It nearly doubled in 2020 to 4.4% and then jumped significantly to 11.15% in 2021, coinciding with the peak in NOPAT. After this peak, ROIC declined to 7.54% in 2022 and remained relatively stable thereafter with minor fluctuations (7.8% in 2023 and 7.05% in 2024). Despite the post-2021 decline, ROIC levels from 2022 onwards are substantially higher relative to earlier years, indicating improved efficiency in generating returns from invested capital compared to the initial base year.

Overall Analysis

The company exhibited marked improvement in profitability and capital efficiency during the mid-period (2020-2021), with both NOPAT and ROIC peaking in 2021. However, these gains were not fully sustained, as both profitability and ROIC declined following the peak despite continued growth in invested capital. The steady increase in invested capital suggests continued expansion or reinvestment efforts. The decline in ROIC and NOPAT following their peaks may warrant closer examination of operational efficiency, cost management, or market conditions impacting profitability. Nonetheless, the company maintains better profitability and capital returns post-2019 baseline than initially reported, albeit with notable volatility.

The financial data reveals several important trends regarding profitability, asset utilization, tax efficiency, and overall return relative to invested capital over the six-year period.

Operating Profit Margin (OPM)

The operating profit margin demonstrated a general upward trajectory from 2.35% in 2019 to a peak of 9.6% in 2021, signifying improved operational efficiency during this timeframe. However, following this peak, there was a decline to 6.41% in 2022, with a moderate recovery to 7.8% by 2024. This pattern suggests volatility but an overall better profit generation from operations compared to the initial year.

Turnover of Capital (TO)

Turnover of capital experienced slight fluctuations, starting at 1.31 in 2019, dipping to 1.2 in 2020, and then fluctuating marginally around 1.3 in subsequent years. The highest turnover was recorded in 2022 at 1.41, indicating relatively more efficient use of capital to generate revenue during that year. Despite some variation, the ratio remained fairly stable over the period, implying consistent asset utilization efficiency.

Effective Cash Tax Rate (1 – CTR)

The effective cash tax rate proxy (1 minus CTR) was highest in 2020 at approximately 90.71%, indicating lower effective tax payments relative to cash. This measure showed a decreasing trend thereafter, dropping to 72.43% in 2024. This decline suggests an increase in effective tax payments or a reduction in tax shields, which could impact net profitability and cash flow.

Return on Invested Capital (ROIC)

ROIC followed a similar pattern to the operating profit margin, rising sharply from 2.29% in 2019 to a high of 11.15% in 2021, then retreating to around 7.05% in 2024. The 2021 peak reflects a significant increase in the efficiency with which invested capital generated returns, potentially due to operational improvements or favorable market conditions. The subsequent decline may indicate either increased capital base without proportional profit growth or operational challenges.

In summary, the company exhibited marked improvements in profitability and capital efficiency up to 2021, followed by a period of stabilization with some decline in key indicators. The turnover of capital remained relatively steady, while the effective cash tax rate suggests a somewhat less favorable tax position in the more recent years. Overall, the data reflects improved operational performance mid-period, tempered by modest declines as of the latest reports.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT demonstrated a significant upward trend from 2019 through 2021, rising sharply from $1,639 million to $8,056 million. However, in 2022, there was a notable decline to $5,997 million, followed by a moderate recovery in 2023 and 2024, reaching $6,839 million. Despite these fluctuations, the overall level in recent years remains substantially higher than the initial 2019 value.

Revenue

Revenue figures show a relatively stable pattern from 2019 to 2020, with a slight decrease from $69,693 million to $69,217 million. A marked increase occurred in 2021, peaking at $83,959 million, and continued growth into 2022, achieving the highest value of $93,512 million during the period. However, this was followed by a decline in 2023 and 2024, with revenues decreasing to $90,155 million and then $87,693 million respectively. Despite the recent declines, revenue levels remained above the starting point in 2019.

Operating Profit Margin (OPM)

The operating profit margin exhibited a steady improvement from 2019 to 2021, increasing from 2.35% to 9.6%. This indicates enhanced operational efficiency or profitability during this timeframe. In 2022, the margin contracted to 6.41%, reflecting a more challenged profitability environment. The margin then demonstrated a gradual improvement in 2023 and 2024, reaching 7.32% and 7.8% respectively, though still below the peak of 2021.

Summary of Trends and Insights

Overall, the company experienced significant growth in profitability prior to 2022, both in absolute net operating profit and margin terms. The peak in 2021 suggests an optimal operational period, followed by a period of contraction and partial recovery. Revenue growth showed strong momentum until 2022, after which there was a decline, indicating potential market or operational challenges. The simultaneous pattern in profit margins aligns with revenue trends, underscoring the influence of top-line performance on profitability. The moderate recovery in profitability metrics in the last two years suggests stabilization efforts are yielding some improvement. Continued focus on managing costs and sustaining revenue growth will be critical to maintain or improve profitability going forward.

Revenue Trend

The revenue shows a fluctuating pattern over the six-year period. Starting at 69,693 million US dollars in 2019, it slightly decreased to 69,217 million in 2020. This was followed by significant growth in 2021 and 2022, reaching a peak of 93,512 million US dollars. However, revenue declined in the next two years, falling to 90,155 million in 2023 and further to 87,693 million in 2024. Overall, there is a peak in 2022 with a downward trend afterward.

Invested Capital Trend

Invested capital demonstrates a consistent upward trajectory throughout the period analyzed. The amount increased from 53,043 million US dollars in 2019 to 70,265 million in 2024. The growth is steady across all years, indicating ongoing capital investment without any periods of decline or stagnation.

Turnover of Capital (TO) Trend

The turnover of capital ratio exhibits some variability. It started at 1.31 in 2019, decreased to 1.20 in 2020, then improved back to 1.31 in 2021. The ratio peaked at 1.41 in 2022, suggesting increased efficiency in capital utilization that year. However, the ratio then declined to 1.30 in 2023 and further to 1.25 in 2024, signaling a reduction in turnover efficiency following the peak.

Overall Analysis

There appears to be a divergence between the growth of invested capital and revenue performance in recent years. While invested capital has steadily increased, revenue experienced a notable rise until 2022 followed by a decline. The turnover of capital ratio reflects changes in how effectively the company translates capital into revenue, with a high point in 2022 before declining. This may indicate that, despite ongoing investment, operational efficiency or market conditions affected revenue generation negatively after 2022.

Cash Operating Taxes

The cash operating taxes exhibit an overall increasing trend from 2019 to 2024, rising from $423 million in 2019 to $1,885 million in 2024. The data shows a significant drop in 2020 to $259 million, followed by a sharp increase in 2021 to $893 million. From 2021 onwards, the cash operating taxes continue to rise steadily through 2024, indicating higher tax liabilities or improved profitability impacting tax payments.

Net Operating Profit Before Taxes (NOPBT)

Net operating profit before taxes shows considerable volatility within the period. Starting at $1,639 million in 2019, it increases substantially to $2,790 million in 2020, and then peaks at $8,056 million in 2021. However, in 2022 it decreases to $5,997 million, before slightly recovering to $6,598 million in 2023 and $6,839 million in 2024. This pattern reflects significant fluctuations in operational profitability over the period, with a peak in 2021 followed by some decline and stabilization in subsequent years.

Effective Cash Tax Rate (CTR)

The effective cash tax rate demonstrates variability across the years. Starting at 25.81% in 2019, it sharply declines to 9.29% in 2020. It then increases slightly to 11.08% in 2021 and continues upward to 16.39% in 2022, 17.83% in 2023, and reaches 27.57% in 2024. The overall trend indicates a recovery and eventual rise in the effective tax rate to levels higher than at the beginning of the period, potentially reflecting changes in tax regulations, profitability mix, or tax strategy adjustments.

Summary Insight

The data presents a scenario of fluctuating profitability and tax payments, with net operating profit peaking in 2021 and then declining but remaining above 2019 levels. Cash operating taxes, after a dip in 2020, consistently increase through 2024. The effective cash tax rate dropped significantly in 2020 but then steadily increased, surpassing the initial rate by 2024. This combination suggests that while profitability experienced volatility, the company faced increasing tax obligations in the later years, influencing effective tax rates and cash tax outflows.