FedEx (FDX  ) shares were higher following the company's fiscal Q4 results despite it missing analysts' estimates on the bottom line. However, the stock price likely benefited from low expectations due to weakness in many e-commerce and retailers, and it's better than expected outlook for Q3.

FedEx is considered a leading indicator for the economy due to having customers across all industries. So, it's interesting to note that the stock actually peaked in mid-2021, well before economic stresses became evident at the beginning of the year. Despite the stock's decline from it's all-time high, it continues to post impressive results, leading to very attractive valuations and dividends.

Inside the Numbers

In Q2, FedEx reported $6.87 per share in earnings which came in slightly below estimates of $6.88 per share. This was a 37% increase from last year. Revenue was up 8% to $24.5 billion, just topping estimates of $24.4 billion.

For its fiscal 2023, the company expects EPS between $22.50 and $24.50 which was above analysts' expectations of $22.21 per share. The midpoint of the company's range implies an 8% increase in earnings.

Some reasons for its better than expected guidance is improving revenue quality, improving margins as labor market tightness eases, and gains from investments in capital.

For bulls, another attractive element of FedEx is that its valuation is at decade lows which means that investors have low expectations for future performance. This is mystifying as the company's results and forecast indicate a plateau followed by mild strength rather than an imminent plunge due to a recession.

Another factor in the stock's bullish reception is that the company hiked its dividend by 53%. Although FedEx's payout remains below the 10Y yield, it's increasingly becoming a standout in terms of 'dividend growth'.

FedEx also announced that it would be adding 3 new independent Board members to its Board of Directors, following a push by the hedge fund, D.E. Shaw. The company also revised executives' compensation packages to tie bonuses to EPS in an effort to reward cost discipline.

In the conference call, management gave some optimistic predictions about the future. It sees EPS growth of 19% and annual sales growth of 6%. It also marked Raj Subramanian's debut as CEO after taking over for the previous CEO and founder, Fred Smith.