Microsoft Excel LibreOffice Calc

FedEx Corp. (FDX)

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate

Free Cash Flow to The Firm (FCFF)

FedEx Corp., FCFF calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Net income 540  4,572  2,997  1,820  1,050  2,097 
Net noncash charges 7,564  3,562  4,135  4,425  4,753  3,415 
Changes in assets and liabilities (2,491) (3,460) (2,202) (537) (437) (1,248)
Cash provided by operating activities 5,613  4,674  4,930  5,708  5,366  4,264 
Cash payments for interest, net of capitalized interest, net of tax1 442  387  317  213  130  83 
Capitalized interest, net of tax2 46  45  27  28  24  18 
Capital expenditures (5,490) (5,663) (5,116) (4,818) (4,347) (3,533)
Free cash flow to the firm (FCFF) 611  (557) 157  1,131  1,173  833 

Based on: 10-K (filing date: 2019-07-16), 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the FedEx Corp.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. FedEx Corp.’s FCFF declined from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Interest Paid, Net of Tax

FedEx Corp., interest paid, net of tax calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Effective Income Tax Rate (EITR)
EITR1 28.40% 26.10% 34.60% 33.60% 35.50% 36.30%
Interest Paid, Net of Tax
Cash payments for interest, net of capitalized interest, before tax 617  524  484  321  201  131 
Less: Cash payments for interest, net of capitalized interest, tax2 175  137  167  108  71  48 
Cash payments for interest, net of capitalized interest, net of tax 442  387  317  213  130  83 
Interest Costs Capitalized, Net of Tax
Capitalized interest, before tax 64  61  41  42  37  29 
Less: Capitalized interest, tax3 18  16  14  14  13  11 
Capitalized interest, net of tax 46  45  27  28  24  18 

Based on: 10-K (filing date: 2019-07-16), 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14).

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2 2019 Calculation
Cash payments for interest, net of capitalized interest, tax = Cash payments for interest, net of capitalized interest × EITR
= 617 × 28.40% = 175

3 2019 Calculation
Capitalized interest, tax = Capitalized interest × EITR
= 64 × 28.40% = 18

Enterprise Value to FCFF Ratio, Current

FedEx Corp., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (US$ in millions)
Enterprise value (EV) 54,581 
Free cash flow to the firm (FCFF) 611 
Valuation Ratio
EV/FCFF 89.39
Benchmarks
EV/FCFF, Competitors1
CSX Corp. 18.81
Union Pacific Corp. 23.28
United Parcel Service Inc. 17.02
EV/FCFF, Sector
Industrial Transportation 23.37
EV/FCFF, Industry
Industrials 23.26

Based on: 10-K (filing date: 2019-07-16).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Enterprise Value to FCFF Ratio, Historical

FedEx Corp., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 59,545  74,531  68,766  53,019  51,868  44,948 
Free cash flow to the firm (FCFF)2 611  (557) 157  1,131  1,173  833 
Valuation Ratio
EV/FCFF3 97.52 — 437.03 46.88 44.24 53.96
Benchmarks
EV/FCFF, Competitors4
CSX Corp. — 18.77 23.40 45.00 24.83 33.64
Union Pacific Corp. — 23.55 25.20 22.39 23.12 33.30
United Parcel Service Inc. — 16.23 — 27.31 18.08 26.87
EV/FCFF, Sector
Industrial Transportation — 24.47 85.14 29.26 23.12 32.65
EV/FCFF, Industry
Industrials — 22.69 24.75 23.33 19.95 19.32

Based on: 10-K (filing date: 2019-07-16), 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14).

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2 See details »

3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 59,545 ÷ 611 = 97.52

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. FedEx Corp.’s EV/FCFF ratio declined from 2017 to 2018 but then slightly increased from 2018 to 2019.