Using an unlevered Free Cash Flow to Firm (FCFF) model, we project FedEx Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.3% to 4.7% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 46, DPO 20, DIO 3). At a 7.3% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $474.38 per share, suggesting FDX is undervalued by 35.1% at the current price of $351.06.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 5,615 | 5,882 | 6,141 | 6,436 | 6,735 | 6,903 |
| (−) Net Interest | 785 | 822 | 859 | 900 | 942 | 965 |
| (+) D&A | 5,610 | 5,615 | 5,501 | 5,559 | 5,878 | 6,025 |
| EBITDA | 12,010 | 12,320 | 12,501 | 12,894 | 13,555 | 13,894 |
| (−) Tax | 1,347 | 1,412 | 1,474 | 1,545 | 1,616 | — |
| (−) CapEx | 5,909 | 6,191 | 6,463 | 6,773 | 7,088 | — |
| (−) ΔWC | 80 | 398 | 385 | 439 | 445 | — |
| Free Cash Flow (FCF) | 4,673 | 4,319 | 4,178 | 4,138 | 4,405 | — |
| Peers' EBITDA Multiple | 13.2x | |||||
| Terminal Value | 183,673 | |||||
| WACC / Discount Rate | 7.35% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 4,511 | 3,883 | 3,500 | 3,228 | 3,201 | 128,834 |
| Enterprise Value | 147,158 | |||||
| Projection Period | 18,323 | 12.5% | ||||
| Terminal Value | 128,834 | 87.5% | ||||
| (−) Current Net Debt | 31,914 | |||||
| Equity Value | 115,244 | |||||
| (÷) Outstanding Shares | 243M | |||||
| Fair Price | $474 | +35.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.2x | 11.2x | 13.2x | 15.2x | 17.2x |
|---|---|---|---|---|---|
| 5.4% | $354 | $442 | $530 | $618 | $706 |
| 6.4% | $333 | $417 | $501 | $586 | $670 |
| 7.4% | $314 | $394 | $474 | $555 | $635 |
| 8.4% | $296 | $372 | $449 | $525 | $602 |
| 9.4% | $278 | $351 | $424 | $498 | $571 |
Current price: $351.06. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.