FedEx (NYSE: FDX) could be a contender for a defensive stock pick as the economy cools down from continued interest rate hikes from the Federal Reserve. As a transportation and logistics company, FedEx supplies an essential service, delivering all manner of staples and required products people simply can't live without. Furthermore, the company has also made large investments in other industries that can withstand a downturn, such as healthcare, which further strengthens its moat against volatility. But how do the company's fundamentals fare otherwise? Let's explore the pros and cons of this company as a defensive stock pick.

FedEx’s Dividend Analysis

It's arguable that a large part of what makes a stock attractive during an economic downturn is its dividend. Investors can still get compounding returns from companies that pay dividends even if their stock yield trends downwards. In FedEx's case, its dividend has a few things going for it relative to the industrial sector. FedEx's dividend is considered safe and well above the sector median. The company pays out 25.84%. Its yield, though is slightly below the sector median of 1.58%, coming in at 1.46% as its FWD annual payout is $4.60. The five-year growth rate for the dividend is 14.87%, and it has two consecutive years of growth supporting it.

When comparing its FWD dividend yield to peer companies in the same sector, it is more or less equal. C.H Robinson Worldwide (NASDAQ: CHRW) has a yield of 2.02%, while FedEx's yield is 1.97%. Other companies like Expeditors International of Washington (NASDAQ: EXPD) pay 1.31%.

Valuation & Mixed Analyst Revisions

A natural question to ask is how competitive FedEx's valuation is at its current levels. On a forward basis, its GAAP P/E ratio of 10.55 is considerably lower than the sector median of 18.01. Other valuation ratios are also lower, including Price / Sales at 0.62 compared to 1.32. One area where the company is not beating the sector median is its Price / Book ratio of 2.43 compared with 2.51.

The opinion of Wall St for FedEx, though is not so straightforward concerning its short-term outlook. The company has received almost an equal amount of up and down revisions for its revenue estimates, with 13 up revisions and 11 down revisions. Its EPS estimates were also contentious, as it has received 15 up EPS revisions and ten down EPS revisions over the last three months. 

Further polarizing the opinions of investors, the company has received 16 strong buy ratings and ten hold ratings, along with four buy ratings. It should be noted that analysts have consistently overestimated the company's consensus price target over the last five years and that it currently has a 27.4% upside to the MarketBeat consensus price target. 

Growth Rates & Profitability

FedEx's FWD revenue growth estimates are below the sector median, and it's also not beating the sector in terms of margins or profitability. The company's YoY revenue growth has a -36.27% difference from the sector at 11.38%, which is above its 10-year average of 8.16%. Its FWD revenue growth is also less optimistic at 6.54% compared to the sector median of 10.62%. 

In terms of profitability, its gross profit margin is 25.04%, while the sector pulls ahead at 29.62%. After expenses have been factored out, it's also lagging behind with an EBITDA margin of 10.67%, and the sector has an EBITDA margin of 13.02%. 

Overall, the company's share price has contracted -by 15.53% over the last twelve months, which is slightly more than the sector's contraction of -14.63%. FedEx is also not beating the broader market for the long-term as its five-year return is 11.35%, and the S&P 500 delivered 65.13%.