Can Exploding Overseas Sales Fuel FedEx's Growth?

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In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue growth came from abroad. Today, that area makes up half of the S&P 500's growth.

And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.

With that in mind, today we're looking at FedEx (NYS: FDX) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.

Where FedEx's sales were five years ago
Five fiscal years ago, FedEx produced 75% of its sales within the United States.

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Source: S&P Capital IQ.

Where FedEx's sales are today
Today, America is still FedEx's largest market, but its influence is shrinking. While the United States still contributes 70% of sales, domestic sales growth lags far behind other regions.

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Source: S&P Capital IQ.

Moving from 25% of sales in 2006 to 30% of sales in 2011 might not seem like a huge shift, but it's important to remember that international sales are growing off a much smaller number. In terms of absolute sales growth across the last five years, FedEx's international sales growth rate dwarfs domestic sales.

Segment

5-Year Sales Growth

United States14%
International46%

Source: S&P Capital IQ.

Competitor checkup
One last point to check is how FedEx's footprint compares with some of its peers:

Company

Geography With Most Sales

Percent of Sales

FedExUnited States70%
United Parcel Service (NYS: UPS) North America74%
Expeditors International (NYS: EXPD) Asia-Pacific52%

Source: S&P Capital IQ. Results for most recently reported fiscal year.

In the international shipping arena, UPS and FedEx have a pretty similar profile. FedEx has a slightly higher skew toward international sales and much of that comes from its higher international growth rate over the past five years. While its international sales zoomed 46%, UPS' international sales growth was a more modest 28%.

If you're an investor looking for a company in the freight and logistics category with a huge amount of international exposure, Expeditors International might be more your speed. The company sees 52% of its sales from the Asia-Pacific market. However, it's worth noting that the United States is actually one of the company's faster growing segments (while the Asia-Pacific region has stagnated across the past three years) and actually generates most of the company's gross profits before taxes despite generating only half the sales of its Asia-Pacific segment.

Keep searching
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At the time this article was published Eric Bleeker owns shares of no companies listed above. You can follow him on Twitter to see all of his technology and market commentary. The Motley Fool owns shares of Expeditors International. The Fool has created a butterfly spread position in Expeditors International. Motley Fool newsletter services have recommended buying shares of FedEx. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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