FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
Income Statement for FedEx Corporation
Income Statement May-05 May-06 May-07 May-08 May-09
Sales 29,363 32,294 35,214 37,953 35,497
Cost of Sales 21,207 23,171 25,298 27,754 26,439
Gross Profit 8,156 9,123 9,916 10,199 9,058
Gross Profit Margin 27.78% 28.25% 28.16% 26.87% 25.52%
SG&&A 4,173 4,485 4,755 5,296 5,132
EBITDA 3,983 4,638 5,161 4,903 3,856
EBITDA Margin 13.57% 14.36% 14.66% 12.92% 10.86%
Depreciation 1,464 1,545 1,742 1,946 1,975
EBIT 2,519 3,093 3,419 2,957 1,881
EBIT Margin 8.58% 9.58% 9.71% 7.79% 5.30%
Interest Expense 182 175 170 148 156
Nonop Income/Expense 24 60 109 89 71
Special Items -48 -79 -143 -882 -1,204
Pretax Income 2,313 2,899 3,215 2,016 677
Total Taxes 864 1,093 1,199 891 579
Minority Interest 0 0 0 0 0
Income Bef Extra Items 1,449 1,806 2,016 1,125 98
Net Income 1,449 1,806 2,016 1,125 98
Basic EPS - Exclud Extra Items 4.81 5.94 6.57 3.64 0.32
Diluted EPS - Exclud Extra Items 4.72 5.83 6.48 3.60 0.31
Shares Used - Basic EPS 301 304 307 309 311
Shares Used - Diluted EPS 307 310 311 312 312
EPS from Operations 4.88 6.10 6.74 5.89 2.83
Basic EPS - Includ Extra 4.81 5.94 6.57 3.64 0.32
Diluted EPS - Includ Extra 4.72 5.83 6.48 3.60 0.31
Income Before Extra Items 1,449 1,806 2,016 1,125 98
Net Income (Loss) 1,449 1,806 2,016 1,125 98
May-07 May-08 May-09
3,428 4,409 3,811.00 35,214 37,953 35,497
25,298 27,754 26,439 25,298 27,754 26,439
13.55% 15.89% 14.41% 14.62% 9,916 10,199 9,058
28.16% 26.87% 25.52%
0.00 1.00 4,755 5,296 5,132
Fluctuations in Fuel Costs 5,161 4,903 3,926
EPS 2007 2008 2009 14.66% 12.92% 11.06%
6.57 3.64 0.30 1,742 1,946 1,975
-40% $9.59 $6.57 $1.00 3,419 2,957 1,951
-30% $8.83 $5.84 $0.83 9.71% 7.79% 5.50%
-20% $8.08 $5.11 $0.65 170 148 156
-10% $7.32 $4.37 $0.48 109 89 71
0% $6.57 $3.64 $0.30 -143 -882 -1,204
10% $5.81 $2.91 $0.13 3,215 2,016 677
20% $5.06 $2.18 -$0.04 1,199 891 582
30% $4.30 $1.44 -$0.22 0 0 0
40% $3.55 $0.71 -$0.39 2,016 1,125 95
2,016 1,125 95
6.57 3.64 0.30
6.48 3.61 0.30
307 309 311
13,740 14,202 13,767 311 312 312
25,298 27,754 26,439 6.74 5.89 2.83
54.31% 51.17% 52.07% 52.52% 6.57 3.64 0.30
6.48 3.61 0.30
0% 1.00 2,016 1,125 95
Fluctuations in Labor Costs 2,016 1,125 95
EPS 2007 2008 2009
6.57 3.64 0.30
-10.0% $9.28 $6.27 $0.93
-7.5% $8.60 $5.62 $0.77
-5.0% $7.92 $4.96 $0.62
-2.5% $7.25 $4.30 $0.46
0.0% $6.57 $3.64 $0.30
2.5% $5.89 $2.98 $0.15
5.0% $5.21 $2.32 -$0.01
7.5% $4.53 $1.67 -$0.16
10.0% $3.85 $1.01 -$0.32
May-07 May-08 May-09
35,214 37,953 35,497
25,298 27,754 26,439
9,916 10,199 9,058
28.16% 26.87% 25.52%
4,755 5,296 5,132
5,161 4,903 3,926
14.66% 12.92% 11.06%
1,742 1,946 1,975
3,419 2,957 1,951
9.71% 7.79% 5.50%
170 148 156
109 89 71
-143 -882 -1,204
3,215 2,016 677
1,199 891 582
0 0 0
2,016 1,125 95
2,016 1,125 95
6.57 3.64 0.30
6.48 3.61 0.30
307 309 311
311 312 312
6.74 5.89 2.83
6.57 3.64 0.30
6.48 3.61 0.30
2,016 1,125 95
2,016 1,125 95
FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
Balance Sheet for FedEx Corporation
Balance Sheet May-05 May-06 May-07 May-08 May-09
Cash 1,039.00 1,937.00 1,569.00 1,539.00 2,292.00
Receivables 3,297.00 3,516.00 3,942.00 4,359.00 3,391.00
Bad Debt Reserve 2.166 2.225 1.965 1.979 1.955
Inventory 250 308 338 435 367
Total Current Assets 5,269.00 6,464.00 6,629.00 7,244.00 7,116.00
PP&E 9,643.00 10,770.00 12,636.00 13,478.00 13,417.00
Intangibles 3,531.00 3,496.00 4,264.00 3,354.00 2,347.00
Equity Investments 0 0 0 0 0.00
Other Investments 0 0 0 0 0.00
Total Assets 20,404.00 22,690.00 24,000.00 25,633.00 24,244.00
Debt - Current Portion 369 850 639 502 653.00
Notes Payable 0 0 0 0 0.00
Accounts Payable 1,739.00 1,908.00 2,016.00 2,195.00 1,372.00
Total Current Liabilities 4,734.00 5,473.00 5,428.00 5,368.00 4,524.00
Total Long Term Debt 2,427.00 1,592.00 2,007.00 1,506.00 1,930.00
Deferred LT Taxes 1,206.00 1,367.00 897 1,264.00 1,071.00
Minority Interests 0 0 0 0 0.00
Total Liabilities 10,816.00 11,179.00 11,344.00 11,107.00 10,618.00
Common Equity 9,588.00 11,511.00 12,656.00 14,526.00 13,626.00
Total Stockholders' Equity 9,588.00 11,511.00 12,656.00 14,526.00 13,626.00
Common Shares O/S 301.982 305.901 307.8 310.8 312.52
FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
Ten Year Summary for FedEx Corporation
Income Statement - 10 Year Summary (in Millions)
Total Net
Sales EBIT Depreciation Income EPS
May-09 35,497.00 677 1,873.00 98 0.31
May-08 37,953.00 2,016.00 1,860.00 1,125.00 3.61
May-07 35,214.00 3,215.00 1,742.00 2,016.00 6.48
May-06 32,294.00 2,899.00 1,545.00 1,806.00 5.83
May-05 29,363.00 2,313.00 1,464.00 1,449.00 4.72
May-04 24,710.00 1,319.00 1,375.00 838 2.76
May-03 22,487.00 1,338.00 1,364.00 830 2.74
May-02 20,607.00 1,160.00 1,345.00 725 2.39
May-01 19,629.04 927.57 1,249.00 584.37 1.99
May-00 18,256.95 1,137.74 1,154.86 688.34 2.32
Balance Sheet - 10 Year Summary (in Millions)
Current Current Shares
Assets Liabilities Long Term Debt Outstanding
May-09 24,244.00 10,618.00 1,930.00 312.0 Mil
May-08 25,633.00 11,107.00 1,506.00 311.0 Mil
May-07 24,000.00 11,344.00 2,007.00 308.0 Mil
May-06 22,690.00 11,179.00 1,592.00 306.0 Mil
May-05 20,404.00 10,816.00 2,427.00 302.0 Mil
May-04 19,134.00 11,098.00 2,837.00 300.0 Mil
May-03 15,385.00 8,097.00 1,709.00 299.0 Mil
May-02 13,812.00 7,267.00 1,800.00 298.6 Mil
May-01 13,392.00 7,492.00 1,900.00 298.6 Mil
May-00 11,527.11 6,741.87 1,776.25 284.9 Mil
Tax Rate
(%)
85.52
44.2
37.29
37.7
37.35
36.47
37.97
37.5
37
39.5
FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
Cashflow Statement for FedEx Corporation
Cash Flows May-05 May-06 May-07 May-08 May-09
Net Income/Starting Line 98 1,125.00 2,016.00 1,806.00 1,449.00
Depreciation/Depletion 1,975.00 1,946.00 1,742.00 1,548.00 1,462.00
Deferred Taxes 299 124 37 187 63
Non-Cash Items 1,356.00 1,037.00 173 217 157
Changes in Working Capital -975 -767 -411 -82 -14
Cash from Operating Activities 2,753.00 3,465.00 3,557.00 3,676.00 3,117.00
Capital Expenditures -2,459.00 -2,947.00 -2,882.00 -2,518.00 -2,236.00
Other Investing Cash Flow Items, Total 76 50 -1,242.00 64 -112
Cash from Investing Activities -2,383.00 -2,897.00 -4,124.00 -2,454.00 -2,348.00
Financing Cash Flow Items -3 38 40 -2 0
Total Cash Dividends Paid -137 -124 -110 -97 -84
Issuance (Retirement) of Stock, Net 41 108 115 144 99
Issuance (Retirement) of Debt, Net 499 -639 148 -369 -791
Cash from Financing Activities 400 -617 193 -324 -776
Net Change in Cash 753 -30 -368 898 -7
FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
FCFF - FCFE for FedEx Corporation
Free cash flows to the firm (FCFF) * May-06 May-07 May-08 May-09
Effective tax rate computation
Taxes from income statement 1,093 1,199 891 579
Change in deferred income taxes from B.S. 161 -470 367 -193
Cash taxes paid 932 1,669 524 772
Pre-tax income 2,899 3,215 2,016 677
Effective tax rate 32.15% 51.91% 25.99% 114.03%
EBIT** 3,093 3,419 2,957 1,881
EBIT(1-t) 2,099 1,644 2,188 -264
Add depreciation and amoritization 1,545 1,742 1,946 1,975
After-tax EBITDA 3,644 3,386 4,134 1,711
Change in net working capital
Current assets less cash 4,527 5,060 5,705 4,824
Prior year C.A. less cash 4,230 4,527 5,060 5,705
Change in current assets less cash 297 533 645 -881
Current liabilities 5,473 5,428 5,368 4,524
Prior year C.L. 4,734 5,473 5,428 5,368
Change in current liabilities 739 -45 -60 -844
Change in non-cash W.C. -442 578 705 -37
Gross capital expenditures
Net P&E 10,770 12,636 13,478 13,417
Prior year Net P&E 9,643 10,770 12,636 13,478
Add depreciation 1,545 1,742 1,946 1,975
Gross capital expenditures 2,672 3,608 2,788 1,914
FCFF 1,414 -800 641 -166
Free cash flows to equity (FCFE)***
FCFF 1,414 -800 641 -166
Add net increase in debt, minority interest, and other
non-current liabilities from B.S. -835 415 -501 424
Effective tax rate for interest**** 37.70% 37.29% 44.20% 85.52%
Subtract after-tax interest expense 109 107 83 23
FCFE 470 -492 58 235
*(p 383 of Damodoran, 2ed): FCFF = EBIT(1-t) + depreciation - capital expenditures - change in working capital
** Includes EBIT + Other income. How Other income is treated depends on what it is.
***(p 382 of Damodoran, 2ed):
FCFE = FCFF - Interest Exp (1-t) - Principal repayments + new debt issues - preferred dividends
(note I have rearranged the equation to solve for FCFE
**** Here defined as income taxes/pre-tax income
Differs from above effective interest because marginal tax rate for interest is not likely deferrable
rking capital
FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
Free Cash Flow Estimates for FedEx Corporation
First 4 columns are reversed from the FCFF-FCFE spreadsheet
Forecast
Parameters used in forecast Parameters 2006 2007 2008
Growth rate of revenues 10% 9% 8%
Cost of sales as % of revenues 73% 72% 72% 73%
SG&A as % of revenues 14% 14% 14% 14%
Other income as % of revenues 0% 0% 0% 0%
Deprec and amort as % of prior year net P&E 16% 16% 16% 15%
Effective tax rate 56% 32% 52% 26%
Current assets other than cash as % revenues 14% 14% 14% 15%
Current liabilities as % of revenues 15% 17% 15% 14%
Net P&E as % revenue 33% 36% 36%
Net P&E as % following year revenue 36% 31% 33% 38%
Growth rate of net P&E 12% 17% 7%
For FCFE calculations
Debt to Total Liabilities and Net Worth 16% 14% 18% 14%
Interest rate 9% 11% 8% 10%
Effective tax rate for interest* 51% 38% 37% 44%
* Here defined as income taxes/pre-tax income
Differs from above effective interest because marginal tax rate for interest is not likely deferrable
Free cash flows to the firm (FCFF) * 2006 2007 2008
Revenue Forecasts 32,294.00 35,214.00 37,953.00
Cost of sales 23,171.00 25,298.00 27,754.00
SG&A expenses 4,485.00 4,755.00 5,296.00
Other income 0 0 0
Depreciation and amortization 1545 1742 1946
EBIT 3,093.00 3,419.00 2,957.00
EBIT 3,093.00 3,419.00 2,957.00
EBIT(1-t) 2,098.63 1,644.10 2,188.41
Add depreciation and amortization 1,545.00 1,742.00 1,946.00
After-tax EBITDA 3,643.63 3,386.10 4,134.41
Change in net working capital
Current assets less cash 4,527.00 5,060.00 5,705.00
Prior year C.A. less cash 4,230.00 4,527.00 5,060.00
Change in current assets less cash 297.00 533.00 645.00
Current liabilities 5,473.00 5,428.00 5,368.00
Prior year C.L. 4,734.00 5,473.00 5,428.00
Change in current liabilities 739.00 (45.00) (60.00)
Change in non-cash W.C. (442.00) 578.00 705.00
Gross capital expenditures
Net P&E 10,770.00 12,636.00 #######
Prior year Net P&E 9,643.00 10,770.00 #######
Change in Net P&E 1,127.00 1,866.00 842.00
Add depreciation 1,545.00 1,742.00 1,946.00
Gross capital expenditures 2,672.00 3,608.00 2,788.00
FCFF 1,413.63 (799.90) 641.41
Free cash flows to equity (FCFE)** 2006 2007 2008
FCFF 1,413.63 (799.90) 641.41
Debt and other non-current liabilities 1,592.00 2,007.00 1,506.00
Prior year debt and other non-current liab. 2,427.00 1,592.00 2,007.00
Net increase (add) (835.00) 415.00 (501.00)
Interest before tax 175.00 170.00 148.00
Subtract after-tax interest expense 109.02 106.60 82.59
FCFE 469.61 (491.50) 57.83
*(p 383 of Damodoran 2ed): FCFF = EBIT(1-t) + depreciation - capital expenditures - change in working capital
**(p 382 of Damodoran 2ed):
FCFE = FCFF - Interest Exp (1-t) - Principal repayments + new debt issues - preferred dividends
(note I have rearranged the equation to solve for FCFE
Short run Intermediate high growth period Declining growth period
2009 2010 2011 2012 2013 2014 2015 2016
-6% -6% 2% 4% 5% 4% 3% 3%
74% 73% 73% 73% 73% 73% 73% 73%
14% 14% 14% 14% 14% 14% 14% 14%
0% 0% 0% 0% 0% 0% 0% 0%
15% 16% 16% 16% 16% 16% 16% 16%
114% 53% 49% 46% 43% 40% 38% 38%
14% 14% 14% 14% 14% 14% 14% 14%
13% 15% 15% 15% 15% 15% 15% 15%
38%
40% 36% 36% 36% 36% 36% 36% 36%
0%
18% 16% 16% 16% 16% 16% 16% 16%
8% 9% 9% 9% 9% 9% 9% 9%
86% 38% 38% 38% 38% 38% 38% 38%
2009 2010 2011 2012 2013 2014 2015 2016
35,497.00 33,367.18 34,034.52 35,395.90 37,165.70 38,652.33 39,811.90 41,006.25
26,439.00 24,291.35 24,777.18 25,768.27 27,056.68 28,138.95 28,983.12 29,852.61
5,132.00 4,654.96 4,748.06 4,937.98 5,184.88 5,392.27 5,554.04 5,720.66
0 - - - - - - -
1975 2,088.04 1,965.40 1,956.32 2,054.14 2,136.31 2,200.40 2,266.41
1,951.00 2,332.83 2,543.89 2,733.33 2,870.00 2,984.80 3,074.34 3,166.57
1,881.00 2,332.83 2,543.89 2,733.33 2,870.00 2,984.80 3,074.34 3,166.57
(263.95) 1,095.93 1,296.83 1,475.41 1,635.28 1,790.23 1,906.09 1,963.27
1,975.00 2,088.04 1,965.40 1,956.32 2,054.14 2,136.31 2,200.40 2,266.41
1,711.05 3,183.96 3,262.23 3,431.73 3,689.42 3,926.54 4,106.49 4,229.68
4,824.00 4,755.57 4,850.69 5,044.71 5,296.95 5,508.83 5,674.09 5,844.31
5,705.00 4,824.00 4,755.57 4,850.69 5,044.71 5,296.95 5,508.83 5,674.09
(881.00) (68.43) 95.11 194.03 252.24 211.88 165.26 170.22
4,524.00 4,942.54 5,041.39 5,243.04 5,505.20 5,725.40 5,897.17 6,074.08
5,368.00 4,524.00 4,942.54 5,041.39 5,243.04 5,505.20 5,725.40 5,897.17
(844.00) 418.54 98.85 201.66 262.15 220.21 171.76 176.91
(37.00) (486.96) (3.74) (7.63) (9.92) (8.33) (6.50) (6.69)
####### 12,628.96 12,570.66 13,199.20 13,727.16 14,138.98 14,563.15 15,000.04
####### 13,417.00 12,628.96 12,570.66 13,199.20 13,727.16 14,138.98 14,563.15
(61.00) (788.04) (58.30) 628.53 527.97 411.81 424.17 436.89
1,975.00 2,088.04 1,965.40 1,956.32 2,054.14 2,136.31 2,200.40 2,266.41
1,914.00 1,300.00 1,907.10 2,584.86 2,582.11 2,548.12 2,624.57 2,703.30
(165.95) 2,370.93 1,358.87 854.50 1,117.23 1,386.75 1,488.42 1,533.07
2009 2010 2011 2012 2013 2014 2015 2016
(165.95) 2,370.93 1,358.87 854.50 1,117.23 1,386.75 1,488.42 1,533.07
1,930.00 1,303.06 1,293.18 1,392.01 1,474.47 1,538.69 1,605.18 1,673.65
1,506.00 1,506.00 1,303.06 1,293.18 1,392.01 1,474.47 1,538.69 1,605.18
424.00 (202.94) (9.88) 98.83 82.46 64.22 66.48 68.48
156.00 121.75 120.83 130.06 137.76 143.76 149.98 156.37
22.58 75.27 74.69 80.40 85.17 88.88 92.72 96.67
235.47 2,092.72 1,274.30 872.93 1,114.52 1,362.10 1,462.19 1,504.88
in working capital
2017 2018 2019 2020 2021 2022 2023
3% 3% 3% 3% 3% 3% 3%
73% 73% 73% 73% 73% 73%
14% 14% 14% 14% 14% 14%
0% 0% 0% 0% 0% 0%
16% 16% 16% 16% 16% 16%
38% 38% 38% 38% 38% 38%
14% 14% 14% 14% 14% 14%
15% 15% 15% 15% 15% 15%
36% 36% 36% 36% 36% 36%
16% 16% 16% 16% 16% 16%
9% 9% 9% 9% 9% 9%
38% 38% 38% 38% 38% 38%
2017 2018 2019 2020 2021 2022 2023
42236.44216 43,503.54 44,808.64 46,152.90 47,537.49 48,963.61 50,432.52
30,748.19 31,670.63 32,620.75 33,599.38 34,607.36 35,645.58
5,892.28 6,069.05 6,251.12 6,438.66 6,631.82 6,830.77
- - - - - -
2,334.40 2,404.43 2,476.57 2,550.86 2,627.39 2,706.21
3,261.57 3,359.42 3,460.20 3,564.01 3,670.93 3,781.05
3,261.57 3,359.42 3,460.20 3,564.01 3,670.93 3,781.05
2,022.17 2,082.84 2,145.32 2,209.68 2,275.97 2,344.25
2,334.40 2,404.43 2,476.57 2,550.86 2,627.39 2,706.21
4,356.57 4,487.27 4,621.89 4,760.55 4,903.36 5,050.46
6,019.64 6,200.23 6,386.24 6,577.83 6,775.16 6,978.42
5,844.31 6,019.64 6,200.23 6,386.24 6,577.83 6,775.16
175.33 180.59 186.01 191.59 197.33 203.25
6,256.30 6,443.99 6,637.31 6,836.43 7,041.53 7,252.77
6,074.08 6,256.30 6,443.99 6,637.31 6,836.43 7,041.53
182.22 187.69 193.32 199.12 205.09 211.25
(6.89) (7.10) (7.31) (7.53) (7.76) (7.99)
15,450.04 15,913.54 16,390.95 16,882.68 17,389.16 17,910.83
15,000.04 15,450.04 15,913.54 16,390.95 16,882.68 17,389.16
450.00 463.50 477.41 491.73 506.48 521.67
2,334.40 2,404.43 2,476.57 2,550.86 2,627.39 2,706.21
2,784.40 2,867.93 2,953.97 3,042.59 3,133.87 3,227.88
1,579.07 1,626.44 1,675.23 1,725.49 1,777.25 1,830.57
2017 2018 2019 2020 2021 2022 2023
1,579.07 1,626.44 1,675.23 1,725.49 1,777.25 1,830.57
1,744.18 1,816.83 1,891.65 1,968.73 2,048.11 2,129.87
1,673.65 1,744.18 1,816.83 1,891.65 1,968.73 2,048.11
70.53 72.65 74.83 77.07 79.38 81.76
162.96 169.75 176.74 183.94 191.36 199.00
100.75 104.94 109.26 113.71 118.30 123.02
1,548.85 1,594.14 1,640.79 1,688.84 1,738.33 1,789.31
2023 as 2022*(1+terminal g)
48,963.61
35,645.58
6,830.77
-
2,706.21
3,781.05
3,781.05
2,344.25
2,706.21
5,050.46
6,978.42
6,775.16
203.25
7,252.77
7,041.53
211.25
(7.99)
17,910.83
17,389.16
521.67
2,706.21
3,227.88
1,830.57
2023 as 2022*(1+terminal g)
1,830.57
2,109.55
2,027.79
81.76
197.10
121.85
1,790.48
FedEx Corporation
November 8, 2009
Note: Blue numbers indicate numerical input by user
Valuation for FedEx Corporation
Date of valuation 11/8/2009
Capital costs Assigned Reported Source for reported figure
Current 20-year T-bond rate 3.43% 3.43% source: Aswath Damodaran
Equity risk premium 5.17% 5.17% source: Aswath Damodaran
FedEx stock beta 1.09 1.09 source: reuters.com
FedEx current ke 9.07%
FedEx current kd 8.08% 8.08% source: best guess using FedEx's interest pay
Effective tax rate 38.00% 38.00% source: 2009 income taxes divided by pre-ta
FedEx after-tax kd 5.01%
Debt value estimate: book value (000s) 1,930,000 1,930,000 source: 2009 balance sheet (long-term debt
Current market value of FedEx
Number of shares outstanding (000s) 312,520 312,520 source: reuters.com
Price $77.12 $77.12 source: reuters.com
Equity value (000s) 24,101,542
Total value 26,031,542
Debt ratio 7.41%
WACC 8.76% Formula: WACC = (D/V)kd(1-t) + (E/V)ke, wh
NOT DONE YET
Forecasts
2010 2011 2012 2013
FCFF 2,370.93 1,358.87 854.50 1,117.23
FCFE 2,092.72 1,274.30 872.93 1,114.52
Valuation
Date of first CF forecast 5/31/2010
Days until first cash flow 204
Terminal growth rate assumption 3%
FCFF FCFE
Cost of capital 8.76% 9.1% Brought down from above
Cash flow in 2023 1,830.57 1,789.31
Terminal value at 2023 $32,707 $30,386 Constant growth model: V = CF(1+g)/(k-g)
Present value of Terminal Value $11,387 $10,218 Cash flows are discounted to 2009 + 5/12 of a
Present value of intermediate CF 12,134 11,489 Ditto
Total $23,521 $21,707
Add Cash 2,292 2,292
Subtract value of debt 1,930
Equity value $23,883 $23,999
Shares outstanding 312.52
Value per share $76.42 $76.79
Current Price $77.12
Growth Assumptions
Short Run Growth Rate 6%
Terminal Growth Rate 3%
2010 -6% $76.42 7.75%
2011 2% 4% $86.91
2012 4% 5% $89.12
2013 5% 6% $91.81
2014 4% 7% $95.01
2015 3% 8% $98.80
2016 3% 9% $103.26
2017 3% 10% $108.49
2018 3% 11% $114.61
2019 3%
2020 3% Beta Ke
2021 3% 9.07%
2022 3% 0.90 8.08%
2023 3% 0.95 8.34%
1.00 8.60%
1.05 8.86%
1.10 9.12%
1.15 9.38%
1.20 9.63%
1.25 9.89%
1.30 10.15%
1.35 10.41%
1.40 10.67%
Fuel 0 $76.42
Labor 0 -7.5%
Cost of Sales 73% -5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
ss using FedEx's interest payments as compared to its long-term debt
ome taxes divided by pre-tax income
ance sheet (long-term debt + other long-term liabilities)
= (D/V)kd(1-t) + (E/V)ke, where V=D+E. Market values should be used.
2014 2015 2016 2017 2018 2019 2020
1,386.75 1,488.42 1,533.07 1,579.07 1,626.44 1,675.23 1,725.49
1,362.10 1,462.19 1,504.88 1,548.85 1,594.14 1,640.79 1,688.84
model: V = CF(1+g)/(k-g)
scounted to 2009 + 5/12 of a year (i.e., to October 31, 2009)
8.00% 8.25% 8.50% 8.75% 9.00% 9.25% 9.50%
$82.93 $79.33 $76.05 $73.06 $70.31 $67.79 $65.46
$84.97 $81.21 $77.79 $74.67 $71.81 $69.18 $66.75
$87.44 $83.48 $79.89 $76.61 $73.60 $70.83 $68.28
$90.37 $86.18 $82.37 $78.89 $75.70 $72.77 $70.07
$93.84 $89.36 $85.28 $81.57 $78.16 $75.03 $72.15
$97.91 $93.08 $88.69 $84.69 $81.02 $77.66 $74.56
$102.68 $97.43 $92.66 $88.32 $84.35 $80.71 $77.35
$108.25 $102.50 $97.30 $92.55 $88.22 $84.24 $80.58
WACC V-Shaped W-Shaped No Recovery
8.76% Less Gr. $78.46 $74.28 $72.31
7.86% Exp. Gr. $81.14 $76.20 $73.64
8.09% More Gr. $84.27 $78.46 $74.99
8.33%
8.57%
8.81% WACC DCF Valuation
9.05% $76.42
9.29% 8.00% $87.44
9.53% 8.25% $83.48
9.77% 8.50% $79.89
10.01% 8.75% $76.61
10.25% 9.00% $73.60
9.25% $70.83
9.50% $68.28
-30% -20% -10% 0% 10% 20% 30%
$147.98 $135.42 $122.85 $110.28 $97.71 $85.15 $72.58
$136.70 $124.13 $111.56 $98.99 $86.43 $73.86 $61.29
$125.41 $112.84 $100.28 $87.71 $75.14 $62.57 $50.00
$114.12 $101.56 $88.99 $76.42 $63.85 $51.28 $38.72
$102.84 $90.27 $77.70 $65.13 $52.57 $40.00 $27.43
$91.55 $78.98 $66.41 $53.85 $41.28 $28.71 $16.14
$80.26 $67.70 $55.13 $42.56 $29.99 $17.42 $4.86
2021 2022
1,777.25 1,830.57
1,738.33 1,789.31
9.75% 10.00% 10.25%
$63.30 $61.30 $59.43
$64.50 $62.41 $60.47
$65.92 $63.72 $61.68
$67.56 $65.24 $63.08
$69.48 $67.00 $64.70
$71.69 $69.03 $66.56
$74.24 $71.37 $68.70
$77.19 $74.07 $71.16