19/6: FedEx stock be bought after increasing dividends or changing management?

Freight and logistics giant FedEx (NYSE: FDX) is doing its best to win investors' confidence in the current tough market. 

On Tuesday, the company's CEO, Raj Subramaniam, announced a series of innovations designed to create "lasting value for shareholders".


As part of an agreement with investment management firm D.E. Shaw, a Memphis, Tennessee-based parcel delivery service provider, increased its quarterly dividend by more than 50%, restructured its board of directors and promised to cut costs to fight inflation. highest in the US for 40 years.


The company's shares rose 14% in Tuesday trading, the biggest daily gain in nearly 36 years, when investors welcomed the move. FedEx shares are down 12.8% this year, compared with a 23% drop in the S&P 500. The FDX closed Thursday at $ 225.31.


In March, FedEx posted lower quarterly earnings than Wall Street estimates, pressured by rising costs associated with US labor shortages and tighter package volumes. This reduces the profit from price increases.


However, D.E. Shaw saw the worse-than-expected report as an opportunity to raise his stake in the global Courier. As of March 31, the investment firm has held about $ 200 million in shares in FedEx, according to FactSet.

Change of Executive Board
As part of its shareholder-friendly move, FedEx will appoint Amy Lane and Jim Vena as effective independent directors immediately, with a third new director to be named thereafter - FedEx and D.E Shaw agreed.


The change in the company's leadership came as the logistics industry experienced slowing business after the pandemic-induced boom in delivery cooled down.

Michael O'Mary, CEO at D.E. Shaw, said the additions to the board and cost-cutting measures will help FedEx implement its plan to increase shareholder returns.
Struggles to increase profits
The changes announced this week show that Raj Subramaniam, who took over as CEO from founder Fred Smith on June 1, is more open to addressing investor concerns. as FedEx struggled to increase margins, Bloomberg said in its report.

Over the past five years, FedEx has outperformed its rival, United Parcel Service (NYSE: UPS), only up 7% as UPS rose more than 50%.

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