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1. Company Snapshot

1.a. Company Description

XPO Logistics, Inc.provides freight transportation services in the United States, rest of North America, France, the United Kingdom, rest of Europe, and internationally.The company operates in two segments, North American LTL and Brokerage and Other Services.


The North American LTL segment provides customers with less-than-truckload (LTL) services, such as geographic density and day-definite regional, inter-regional, and transcontinental LTL freight services.This segment also offers cross-border U.S. service to and from Mexico and Canada, as well as intra-Canada service.The Brokerage and Other Services segment offers last mile logistics for heavy goods sold through e-commerce, omnichannel retail, and direct-to-consumer channels, as well as other non-core brokered freight transportation modes.


It provides its services to customers in various industries, such as industrial and manufacturing, retail and e-commerce, food and beverage, logistics and transportation, and consumer goods.The company was incorporated in 2000 and is based in Greenwich, Connecticut.

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1.b. Last Insights on XPO

XPO Logistics' recent performance was driven by strong Q4 2025 results, with EPS and revenue surpassing consensus estimates. The company's LTL segment drove margin expansion, with an operating ratio improvement of 180bps. A solid balance sheet with 2.4x leverage, ample liquidity, and manageable debt maturities also contributed positively. However, Citigroup's recent neutral rating and $205 price target may limit near-term upside. Additionally, management's focus on debt reduction over buybacks at current valuations could impact shareholder returns. (Source: Citigroup)

1.c. Company Highlights

2. Strong Q4 Earnings with Margin Expansion

The company reported adjusted EBITDA of $312 million and adjusted diluted EPS of $0.88 in Q4, with North American LTL generating adjusted operating income of $181 million, up 14% from the prior year. The LTL margin expanded by 590 basis points since 2022, driven by improved customer service, network balancing, and tighter operating processes. The actual EPS came out at $0.4958, missing estimates of $0.76. Revenue growth is expected to be 6.3% next year. With a P/E Ratio of 74.84 and P/S Ratio of 2.91, the market seems to be pricing in high expectations for future growth.

Publication Date: Feb -18

📋 Highlights
  • Strong Q4 Financials:: Delivered $312M adjusted EBITDA and $0.88 adjusted EPS, with North American LTL adjusted operating income up 14% to $181M.
  • Margin Expansion:: LTL margin expanded 590 bps since 2022, driven by improved service quality and pricing gains (6% yield growth excluding fuel).
  • AI-Driven Cost Efficiency:: Productivity gains from AI route optimization could save $900M annually, with $9M annual bottom-line impact per 1 bps productivity improvement.
  • Capacity & Fleet Strength:: 30% excess door capacity and a 3.7-year average fleet age (youngest in industry) reducing maintenance costs to historical lows.
  • 2026 Guidance:: Targets 100-150 bps OR improvement via yield growth and AI efficiencies, with free cash flow up over 50% YoY and incremental margins >40% in upcycle.

Operational Improvements

The company has made significant investments in its network, creating over 30% excess door capacity, which positions it for profitable share gains and operating leverage as demand recovers. The average sector age at year-end is 3.7 years, one of the youngest fleets in the industry, improving reliability and safety. As Mario Harik mentioned, "We've deliberately invested in the network ahead of the upcycle... positioning us for profitable share gains and operating leverage as demand recovers."

Pricing Power and Yield Growth

The company has seen customers place more value on its service, reflected in pricing gains, with yield excluding fuel growing by 6% for the full year. For 2026, the company expects mid-single-digit pricing increases, driven by initiatives such as premium services and small to medium-sized customer growth. Ali-Ahmad Faghri stated that revenue per shipment is expected to be up in the mid-single-digit range, similar to overall yield growth.

Cost Efficiency and Productivity Gains

The company has improved cost efficiency, driven by productivity gains and a lower reliance on purchased transportation. Productivity improved by roughly one and a half points for the year, with the ramp in the second half from the latest technology rollouts. The company expects to continue to drive productivity gains through AI-driven initiatives, with potential upside to mid-single-digit improvements.

Valuation and Outlook

With an EV/EBITDA of 24.14 and ROE of 17.81%, the company seems to be in a strong position to deliver future growth. The company's guidance for 2026 expects 100 to 150 basis points of margin improvement, accelerating relative to last year, without a meaningful macro recovery. The company's long-term target is to improve its operating ratio into the seventies, and eventually, into the sixties, driven by yield growth and cost efficiency initiatives.

3. NewsRoom

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50% In Just 5 Stocks: Why I'm Willing To Invest Big In High-Quality

Feb -13

Source: seekingalpha.com

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Here Are Wednesday’s Top Wall Street Analyst Research Calls: BP Plc., Cloudflare, Dick’s Sporting Goods, Mattel, Noble Corp., Qualcomm, Tyler Technologies, XPO, and More

Feb -11

Source: 247wallst.com

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XPO: Strong Execution, But Valuation Leaves No Margin Of Safety (Rating Downgrade)

Feb -11

Source: seekingalpha.com

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XPO (NYSE:XPO) Hits New 1-Year High Following Analyst Upgrade

Feb -10

Source: defenseworld.net

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XPO, Inc. (NYSE:XPO) Receives Consensus Recommendation of “Moderate Buy” from Brokerages

Feb -09

Source: defenseworld.net

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Globalization Is Breaking - And It Changed The Way I Invest

Feb -08

Source: seekingalpha.com

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The Big 3: BE, WMT, XPO

Feb -06

Source: youtube.com

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XPO (NYSE:XPO) Shares Gap Up on Earnings Beat

Feb -06

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.21%)

6. Segments

North American Less-Than-Truckload

Expected Growth: 8%

XPO Logistics' North American Less-Than-Truckload (LTL) segment growth is driven by increasing e-commerce demand, rising freight volumes, and strategic investments in digitalization and network optimization. Additionally, the company's focus on operational efficiency, cost savings, and customer service improvements contribute to its 8% growth.

European Transportation

Expected Growth: 6%

XPO Logistics' European Transportation segment growth is driven by increasing e-commerce demand, strategic acquisitions, and a strong presence in the region. Additionally, investments in digitalization and operational efficiency have improved customer satisfaction, leading to higher retention rates and new business wins. Furthermore, a growing demand for sustainable logistics solutions and XPO's commitment to reducing carbon emissions have contributed to the segment's 6% growth.

7. Detailed Products

Less-than-Truckload (LTL)

XPO Logistics offers LTL services for shipments that do not require a full truckload, providing cost-effective and efficient transportation solutions.

Truckload (TL)

XPO Logistics provides TL services for full truckload shipments, offering dedicated capacity and customized solutions for large-scale transportation needs.

Intermodal

XPO Logistics offers intermodal services, combining truck and rail transportation to provide a cost-effective and environmentally friendly solution.

Last Mile

XPO Logistics provides last mile delivery services, ensuring timely and efficient delivery of goods to customers' doorsteps.

Freight Forwarding

XPO Logistics offers freight forwarding services, providing customized logistics solutions for international and domestic shipments.

Warehouse and Distribution

XPO Logistics provides warehouse and distribution services, offering customized logistics solutions for inventory management and order fulfillment.

Supply Chain Management

XPO Logistics offers supply chain management services, providing end-to-end logistics solutions for companies.

8. XPO Logistics, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

XPO Logistics, Inc. faces moderate threat from substitutes due to the availability of alternative logistics services and transportation modes.

Bargaining Power Of Customers

XPO Logistics, Inc. has a high bargaining power of customers due to the presence of large and established customers who can negotiate better prices and services.

Bargaining Power Of Suppliers

XPO Logistics, Inc. has a low bargaining power of suppliers due to the presence of multiple suppliers and the company's ability to negotiate better prices.

Threat Of New Entrants

XPO Logistics, Inc. faces a low threat of new entrants due to the high barriers to entry in the logistics industry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

XPO Logistics, Inc. operates in a highly competitive industry with many established players, leading to a high intensity of rivalry among competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 76.46%
Debt Cost 5.53%
Equity Weight 23.54%
Equity Cost 13.99%
WACC 7.52%
Leverage 324.88%

11. Quality Control: XPO Logistics, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 3.3/10

Value: 2.0

Growth: 4.8

Quality: 3.9

Yield: 0.0

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Volatility: 4.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

209.87$

Current Price

209.87$

Potential

-0.00%

Expected Cash-Flows