FED EX: Equity Futures Analysis
FED EX: Equity Futures Analysis
Fed Ex’s common stock currently trades at 90.84 on the New York Stock Exchange. Looking at its five year price history, the stock does look to have witnessed a fair level of volatility in recent times. It began at around the 80-90 mark five years ago but followed an upward trend that saw it reach a peak of 123 in 2007 before which it had suffered from a few downward cycles in mid 2006.
This was on the back of good financial performance and earnings figures which strengthened the company’s operations geographically as well. However, the period after that witnessed a lot of volatility with the stock plunging on many occasions, most notably at the close of 2008 and during 2009 when it got to its lowest point of around 35 per share.
This coincided with the financial crisis that hit many industries hard and crippled businesses in the United States and in Europe as well while having an impact through the market for export and import on the rest of the world not exposed to toxic assets. The stock has managed to recover however and is at one of its highest points in a year which is a representation of the expectations attached with the fundamentals of the business.
Considering the statistics of the stock, the one year futures price can be said to be around 120. This is based on a variety of factors. The stock has continued on an upward trend since the financial crisis has been abetted and has not suffered big demand shortages. This means that it possesses the fundamentals to at least get back to the levels of four years ago.
It was hovering around similar stock prices in 2007 illustrating that investor expectations are in line with this forecasted price. Another thing that has to be taken into account is the risk attached with the stock. Its beta is 1.18 which illustrates that movement with respect to market is high. This poses a greater risk and is one of the reasons for the 120 estimate even though this level had been reached with existing operations and fundamentals three years ago.
There is smaller possibility of market taking reversal or economy going into double dip recession based on the words of the Federal Reserve Chairman and the commitment of the developed countries to avert such crisis which points to stability in the one year time span possibly. Interest rates have been increased by the Fed following the Greenspan era’s extremely low rates which were said to have created problems. This provides alternate investments as well.
However, these rates are still very low when compared with some other countries around the world which makes the forecast of 120 for the equity futures of Fed Ex a viable figure. Investors would be willing to pay this higher figure for the future based on the sustained fundamentals of the company, a forecast that reflects growth in operations and geographical reach. It also is more diversified with less exposure to one continent or region. Therefore it represents a favorable investment with high possibility of good return. The stock price may climb higher considering technology and cost cutting measures in place following financial crisis which are much better than those adopted three years ago in 2007 when such a stock price level was attained by the Fed Ex stock.
Yahoo Finance. (2010, April 29). FedEx Corporation (FDX). Retrieved from http://finance.yahoo.com/echarts?s=FDX+Interactive#chart2:symbol=fdx;range=20050428,20100428;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Subject: Futures Analysis,
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 30 September 2016
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