FedEx Corp. (NYSE:FDX)

The analysis of the financial ratios over the reported periods highlights several trends in operational efficiency, leverage, and shareholder returns.

Return on Assets (ROA)

The ROA exhibits a general upward trend starting from May 31, 2020, where it begins at 1.75%, reaching a peak of 6.32% by August 31, 2021. Following this peak, there is a decline to a low of 3.49% by May 31, 2023. Subsequently, the ROA recovers somewhat, stabilizing around the 4.5% to 5.1% range through to May 31, 2025. This pattern indicates improved asset utilization through mid-2021, followed by a period of reduced efficiency, and more recent stabilization in asset returns.

Financial Leverage

The financial leverage ratio demonstrates a gradual decrease over the reported periods. Starting at 3.77 in August 31, 2019, the ratio declines steadily to around 3.12 by May 31, 2025. This consistent reduction suggests a deliberate strategy of lowering leverage or debt dependency over time, possibly to reduce financial risk or improve solvency.

Return on Equity (ROE)

The ROE shows significant volatility and is initially unreported until May 31, 2020. Once reported, it rises sharply from 7.03% to a notable peak of 21.64% in August 31, 2021, signalling strong profitability and shareholder value creation during this period. Afterward, it declines steadily, reaching approximately 12.1% by May 31, 2023. Following this trough, the ROE increases again, maintaining a range between roughly 14.5% and 16.7% till May 31, 2025. The fluctuations in ROE correspond with changes in ROA and leverage, reflecting dynamic profitability and capital structure management.

The financial data reveals several noteworthy trends over the analyzed periods.

Net Profit Margin

The net profit margin demonstrates an initial increase beginning around May 2020, rising from 1.86% to a peak of 6.23% in August 2021. Following this peak, there is a gradual decline through August 2022 to 3.23%, after which the margin shows a moderate recovery, stabilizing around the 4.5% range by May 2025. This pattern suggests a period of improving profitability that peaked and then faced some pressure before attaining a steady state.

Asset Turnover

Asset turnover remains relatively stable throughout the periods, fluctuating slightly around a ratio of 1.0. Beginning at 0.94 in May 2020, it incrementally improves to about 1.09 in May 2022 before gently declining back near 1.0 by May 2025. This indicates consistent efficiency in utilizing assets to generate revenue with minor short-term variations.

Financial Leverage

Financial leverage shows a gradual downward trend over time, decreasing from 4.02 in May 2020 to approximately 3.12 by May 2025. The leverage ratio peaks early in the dataset and then steadily declines, which points to a strategy of reducing reliance on debt or other liabilities relative to equity during this period.

Return on Equity (ROE)

Return on equity exhibits a significant upward trajectory from May 2020, starting at 7.03% and reaching a notable peak of 21.64% in August 2021. This is followed by a decline to around 12.1% by May 2023, after which ROE gradually recovers, stabilizing in the 14-16% range by mid-2025. The initial rise in ROE corresponds with improvements in net profit margin and asset turnover, while the later decline and stabilization may reflect changes in financial leverage and operational performance.

Overall, the data indicates that the company experienced strong profitability growth and efficient asset utilization through 2021, followed by a period of margin contraction and operational adjustments. Financial leverage decreased steadily, contributing to a more conservative capital structure, while return on equity maintained moderate levels after its peak. The trends suggest a transition from aggressive growth toward a more balanced and stable financial performance.

Net Profit Margin

The net profit margin exhibited a general upward trend from May 31, 2020, to August 31, 2021, climbing from 1.86% to a peak of 6.23%. Following this peak, the margin showed a downward adjustment, declining to a range between 3.23% and 4.71% over the subsequent periods. Starting from May 31, 2023, the margin demonstrated a modest recovery and maintained a relatively steady level, fluctuating slightly around the 4.4% to 5.0% range through to May 31, 2025.

Asset Turnover

Asset turnover indicated an improving trend from May 31, 2020, beginning at 0.94 and gradually increasing to approximately 1.1 by February 28, 2022. After reaching this high, there was a slight decline, followed by stabilization around the 1.0 to 1.03 range in the following periods. This suggests the company improved its efficiency in using assets to generate sales early in the period and then maintained a consistent performance thereafter.

Return on Assets (ROA)

The ROA closely mirrors the movements in net profit margin, starting at 1.75% on May 31, 2020, and rising sharply to peak at 6.32% on August 31, 2021. After this peak, ROA decreased steadily, reaching a lower level around 3.49% by May 31, 2023. Subsequently, a recovery trend is observed, with ROA values stabilizing near 4.5% to 5.1% through May 31, 2025. The correlation between ROA and net profit margin trends indicates that profitability changes were a significant driver of asset returns.