It’s time to talk about a name that has been the talk of the street lately. Here is the breakdown on $XPO, otherwise known as XPO logistics.
Current Price: $117.217
52/Wk High: $118.31
52/Wk Low: $38.47
Market Cap: $10.7 billion
Read below for the breakdown!
XPO Logistics is a major provider of solutions for supply chains. Two core focuses of the company are logistics and transportation.
Recently, XPO announced the spin-off of their logistics segment as an entirely new publicly traded company. This creates a solid situation for shareholders and the company.
Furthermore, with the e-commerce boom in full force, XPO Logistics is seeing solid growth after harsh setbacks in Q2.
XPO logistics beat Q3 expectations with an EPS of $0.84 versus the EPS consensus estimate of $0.40. Not only that but revenues also exceeded expectations coming in at $4.22 billion for Q3, far better than the 2019 level of $4.15 billion.
On the downside, net income declined to $84 million and operating income declined to $223 million, both of which below the previous same time 2019 levels.
When it comes to the EBITDA the company delivered, reporting an adjusted EBITDA of $439 million in Q3, higher than the 2019 level of $438 million.
XPO Logistics also reported solid guidance and expectations for 2020 and Q4. Management expects a Q4 EBITDA of $400 million to $410 million. XPO management also expects the full year 2020 EBITDA to land around $1.35 billion.
Finally, XPO Logistics expects Q4 free cash flow to land within a range of $25 million to $50 million and 2020 full-year free cash flow to be $500 million.
Within the Q3 report, it was noted that “e-commerce continues to be a huge tailwind for us, particularly in contract logistics and last mile,” CEO Brad Jacobs said.
Digging into the balance sheet the numbers are solid but there is room for improvement.
Total Debt: $6.675 billion
Total Liabilities: $13.096 billion
Total Assets: $15.745 billion
Cash & Short Term Inv: $2.025 billion
On the downside, the valuation has gotten quite overdone.
Price to Earnings: 168.48x
Price to Sales: 0.64x
Price to Book: 3.85x
Price to Cash Flow: 8.65x
When it comes to management, the leadership at XPO has definitely had its ups and downs given the numbers.
Return on Equity: 3.11%
Return on Assets: 0.65%
Return on Invested Capital: 0.86%
Taking in the numbers the analysts remain bullish on XPO Logistics with a mean price target of $126.73/share, representing a 8.25% upside.
It is also important to note that the high price target is $158.00/share, representing a 34.96% gain, while the low price target is $80.00/share, representing a -31.67% loss.
The big money is also quite involved, with 93.74% of XPO Logistics being owned by institutions. Top holders include Orbis Investment Management, The Vanguard Group, and BlackRock Institutional Trust.
When it comes to the technicals XPO Logistics stock is bullish. According to the six-month charts the MACD has been trending upward within a tight range around 4.18 down to 3.41.
The six-month charts are also indicating an RSI of 74.78 and CCI of 264.41 both of which are on the high end. It is also important to note that $XPO only trades roughly a point off its highs.
In short, XPO Logistics is a solid buy for the long term but it has run a lot off the pandemic lows, and waiting for a short-term pullback may be preferable.