FedEx Corp. (NYSE:FDX)

Return on Assets (ROA)

The Return on Assets shows an overall upward trend from 2019 to 2024, beginning at 0.99% in 2019 and reaching 4.98% by 2024. There was a notable increase from 2019 to 2021, with ROA peaking at 6.32% in 2021. After this peak, a decline occurred in 2022 to 4.45%, followed by a gradual recovery in the subsequent years to nearly 5% in 2024. This pattern suggests improvements in asset profitability, with some variability in recent years.

Financial Leverage

Financial leverage rose from 3.06 in 2019 to a high of 4.02 in 2020, indicating increased reliance on debt or liabilities relative to equity during that period. Following 2020, financial leverage generally decreased, reaching 3.15 in 2024. This reduction suggests a strategic move towards lower leverage, potentially reducing financial risk.

Return on Equity (ROE)

The Return on Equity experienced significant growth from 3.04% in 2019 to a peak of 21.64% in 2021. After this peak, ROE decreased to approximately 15% in 2022 and remained relatively stable through 2024, ending at 15.7%. The initial sharp increase portrays strong profitability and efficient use of equity in the earlier years, followed by a more stabilized, although reduced, performance in the later years.

General Observations

The combined analysis of ROA and ROE reveals that both asset and equity returns improved markedly up to 2021, with a stabilization or mild decline afterwards. Concurrently, the reduction in financial leverage after 2020 suggests a deliberate effort to manage risk and possibly strengthen the balance sheet. The alignment of these trends points to a period of enhanced profitability followed by a phase focused on maintaining performance while controlling financial exposure.

Net Profit Margin

The net profit margin demonstrated a generally positive trend over the examined period, increasing from 0.77% in 2019 to 4.94% in 2024. The margin saw a notable rise between 2019 and 2021, peaking at 6.23% in 2021, before experiencing a decline in 2022 to 4.09%. The figure then modestly rebounded in the following years, suggesting improvements in profitability or cost management after 2021 despite some volatility.

Asset Turnover

Asset turnover generally exhibited a declining trend with a drop from 1.28 in 2019 to 0.94 in 2020. Subsequent years showed minor fluctuations, with values ranging between 1.01 and 1.09 from 2021 through 2024. This indicates a decrease in operational efficiency initially, followed by stabilization, implying the company generated slightly less revenue per unit of asset over time but managed to maintain steady performance after 2020.

Financial Leverage

Financial leverage peaked at 4.02 in 2020, up from 3.06 in 2019, indicating increased reliance on debt or equity financing relative to assets during that year. After 2020, leverage ratios declined gradually to 3.15 in 2024. This reduction suggests a conscious effort to deleverage or a shift toward less aggressive capital structures over the later periods, possibly to reduce financial risk.

Return on Equity (ROE)

ROE exhibited a significant upward trend from 3.04% in 2019 to a peak of 21.64% in 2021, correlating with the improved profitability observed during the same period. However, ROE decreased in 2022 to 15.34% and remained relatively stable near this level through 2024. This pattern reflects strong profitability growth followed by a period of normalization, likely influenced by changes in net profit margin and financial leverage.

Tax Burden

The tax burden ratio shows a gradual decline from 0.82 in May 2019 to 0.74 by May 2023 and remains stable at 0.74 in May 2024, indicating a slightly reduced proportion of income paid as tax over the observed period.

Interest Burden

The interest burden ratio improved significantly from 0.53 in May 2019 to 0.89 in May 2021 and has remained relatively stable around 0.88 to 0.89 through May 2024, suggesting better management of interest expenses relative to earnings before interest and taxes in recent years.

EBIT Margin

There was a marked increase in EBIT margin, rising from 1.78% in May 2019 to a peak of 8.89% in May 2021. Subsequently, EBIT margin slightly decreased but maintained a strong performance above 5.9% through May 2024, reflecting improved operational profitability after the initial surge.

Asset Turnover

Asset turnover declined from 1.28 in May 2019 to a low of 0.94 in May 2020, partially recovering to around 1.01-1.09 between May 2021 and May 2024. This indicates an initial reduction in asset efficiency followed by stabilization close to historical levels.

Financial Leverage

Financial leverage increased from 3.06 in May 2019 to a peak of 4.02 in May 2020, before gradually decreasing to 3.15 by May 2024. This trend reflects a period of higher reliance on borrowed capital followed by a moderate de-leveraging strategy.

Return on Equity (ROE)

The return on equity demonstrated significant growth from 3.04% in May 2019 to 21.64% in May 2021. Though it declined thereafter, ROE has consistently remained above 15% from May 2022 through May 2024, indicating strong equity profitability sustained beyond the peak year.

Net Profit Margin

The net profit margin exhibited a notable upward trend from 0.77% in 2019 to a peak of 6.23% in 2021. Following this peak, there was a moderate decline to 4.09% in 2022, after which the margin gradually increased again, reaching 4.94% in 2024. This indicates an overall improvement in profitability over the period, with a significant surge around 2021, followed by stabilization at a higher level than the initial years.

Asset Turnover

Asset turnover experienced a decline from 1.28 in 2019 to 0.94 in 2020, reflecting reduced efficiency in generating revenue from assets at the onset of the observed period. Subsequently, it showed a mild recovery, reaching a maximum of 1.09 in 2022, before slightly tapering off to 1.01 by 2024. The data suggests a partial restoration of asset utilization efficiency after an initial downturn but no return to the highest level recorded in 2019.

Return on Assets (ROA)

Return on assets mirrored the trends observed in net profit margin, starting at a low of 0.99% in 2019 and increasing significantly to 6.32% in 2021. This was followed by a decrease to 4.45% in 2022, then a gradual increase to 4.98% by 2024. The pattern indicates that the company improved its overall profitability relative to its assets substantially through 2021, with some fluctuations thereafter but maintaining improved returns compared to the initial years.

Overall Analysis

The financial ratios collectively suggest that the company experienced considerable improvement in profitability and asset utilization efficiency through 2021. However, the decline in asset turnover and the subsequent fluctuations in net profit margin and ROA after 2021 imply challenges in maintaining peak operational efficiency. Despite these fluctuations, profitability measures remained substantially higher in recent years compared to the start of the period, indicating a strengthened financial performance.

Tax Burden

The tax burden ratio shows a general declining trend from 0.82 in 2019 to 0.74 in 2023 and 2024. This indicates a gradual decrease in the portion of earnings paid as taxes, suggesting potential improvements in tax efficiency or changes in tax policy affecting the company.

Interest Burden

The interest burden ratio exhibits a substantial increase from 0.53 in 2019 to 0.71 in 2020, followed by a further rise to approximately 0.89 from 2021 onwards through 2024. This upward movement implies a lower impact of interest expenses on pre-tax earnings, indicating more effective management of debt costs or reduced interest expenses relative to earnings.

EBIT Margin

The EBIT margin demonstrates considerable improvement over the years, growing from a low 1.78% in 2019 to a peak of 8.89% in 2021. Though it declined in 2022 to 5.97%, it regained momentum in subsequent years, reaching 7.5% in 2024. This pattern reflects enhanced operational profitability and cost control after 2019, with some volatility around 2022 potentially linked to external or internal factors.

Asset Turnover

Asset turnover decreased sharply from 1.28 in 2019 to 0.94 in 2020, indicating less efficient utilization of assets to generate sales during that year. It subsequently recovered to 1.01 by 2021, peaked at 1.09 in 2022, and then slightly declined to 1.01 in 2024. These movements suggest a period of adjustment in asset use efficiency, with stabilization near the 1.0 mark in recent years.

Return on Assets (ROA)

ROA follows a trend similar to EBIT margin, increasing markedly from 0.99% in 2019 to 6.32% in 2021, then falling to 4.45% in 2022 before modestly rising again to 4.98% in 2024. This indicates a strengthening in the company's overall profitability relative to its asset base between 2019 and 2021, followed by a partial decline and recovery in subsequent years.

Summary Insight

The overall financial trend suggests that the company has improved its operational efficiency and profitability significantly since 2019, despite some fluctuations in 2022. Reduced tax and interest burdens have contributed to stronger earnings performance. Meanwhile, asset utilization efficiency experienced volatility but has settled near prior levels. These dynamics reflect a company that has navigated challenges to enhance returns, stabilize cost impacts, and improve profitability ratios.

The financial data reveals several notable trends over the six-year period from 2019 to 2024. The tax burden ratio has generally decreased, indicating a reduction in the proportion of earnings paid as taxes. It declined from 0.82 in 2019 to 0.74 in the last two years, suggesting improved tax efficiency or changes in tax regulations that benefit the company.

The interest burden ratio exhibited a substantial increase from 0.53 in 2019 to 0.89 in 2021, maintaining this higher level through 2024. This change suggests a significant reduction in interest expense relative to earnings before interest and taxes, likely reflecting debt restructuring, lower interest rates, or improved earnings resilience to interest costs.

The EBIT margin experienced a marked increase from 1.78% in 2019 to a peak of 8.89% in 2021, though it fell to 5.97% in 2022 before recovering to 7.5% by 2024. This volatility points to varying operating efficiency or profit generation from core operations, with an overall positive upward trajectory indicative of enhanced operational performance.

Similarly, the net profit margin showed a rising trend, growing from 0.77% in 2019 to 6.23% in 2021. After a decline in 2022 to 4.09%, it gradually improved to 4.94% in 2024. This pattern mirrors the movements in EBIT margin but at a lower magnitude, reflecting the combined effects of operating profit changes and financial costs, such as interest and taxes, on net profitability.

Tax Burden

Gradually decreased from 0.82 to 0.74, indicating improved tax efficiency or lower effective tax rates in recent years.

Interest Burden

Increased sharply from 0.53 to 0.89 between 2019 and 2021, stabilizing thereafter, suggesting reduced interest expenses relative to EBIT.

EBIT Margin

Rose significantly from 1.78% to a peak of 8.89% in 2021, followed by some decline and recovery to 7.5%, reflecting improved operational profitability with some volatility.

Net Profit Margin

Improved from 0.77% to 6.23% by 2021, dipped in 2022, and then increased slightly to 4.94% by 2024, indicating enhanced overall profitability despite some fluctuations.