The world’s largest package delivery company, FedEx Corporation (FDX) has introduced its advanced FedEx Office Print Online solutions. The new Print Online solutions will provide access to Google (GOOG) Docs and enable customers to take prints using the FedEx Office application.
FedEx’ Office Print Online solutions were first launched in 2007 and have evolved as a most sought after online print solution. It offers an array of printing options for various layouts like posters, postcards and catalogues. The printing solutions remain in demand with approximately 250,000 new users per month. We expect the latest addition to woo more customers and aid further growth with the demand for cloud printing technology.
Apart from the latest technological addition to its Services segment, FedEx plans to expand in its Freight and ground segments.
At Express, international growth is expected to take the forefront in fiscal 2012. The growth will be fueled by strong yield actions as well as productivity enhancement such as on-road productivity and store efficiency. Management expects the Ground segment to gain market share from continued growth in commercial, Home Delivery and SmartPost volumes, strong yield initiatives and increased efficiencies.
Going forward, FedEx expects to invest $4.2 billion in fiscal 2012, with about 60% being allocated toward growth projects, including the expansion of FedEx Express' Asian and European networks, FedEx Ground's network, and replacement of vehicles and equipment at FedEx Freight. Further, the company continues to invest significantly in fuel-efficient aircraft, including Boeing 777s and Boeing 757s. The investment will reduce transit time and lead to greater fuel and operational efficiencies providing a competitive edge over its peers like United Parcel Services (UPS).
However, given the weak economic conditions, huge investments on delivery of newer, more fuel-efficient aircraft may lead to excess aircraft capacity at FedEx Express, which could hamper profitability and lead to additional asset impairment charges.
Thus, we are currently maintaining our long-term Neutral rating on FedEx. The stock holds a short-term (1–3 months) Zacks #3 Rank (Hold).
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