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Bull Of The Day: XPO Logistics (XPO)

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XPO Logisitics (XPO - Free Report) is a Zacks Rank #1 (Strong Buy) and sports a clean slate of A's for the Zacks Style Scores.  The Style Scores help investors determine if a stock is more or less attractive to value or growth investors.  In the case of XPO, it has something for everyone... and I mean everyone.  Let's review why this stock hold the best Zacks Rank in this Bull of the Day article.

Description

XPO Logistics, Inc. is a third-party logistics provider offering expedient, single-source solutions for time-critical and service-sensitive shipments through its non-asset based transportation network. XPO serves customers in the U.S, Canada and Mexico with domestic and international freight destinations. XPO's suite of logistics services is offered through three brands: expedited surface transportation through Express-1, Inc., domestic and international freight forwarding services through Concert Group Logistics, Inc., and truckload brokerage services through Bounce Logistics, Inc. XPO Logistics, Inc., formerly known as Express-1 Expedited Solutions, Inc., is based in Buchanan, Michigan.

Earning History

I tend to focus on the last four reports of a company when looking at it for the Bull and Bear of the Day.  For XPO, I see a two misses that were followed up by two beats.  

Both misses were 11 cents and translated to -13% and -11% negative earnings surprises.

The two most recent quarters were beats, with 23% and 24% positive earnings surprises.  The beats were 10 cents and then 24 cents... and those types of beats tend to make analysts rethink their estimates.

Earnings Estimates

Estimates tend to move all over the place for this stock as we see this quarter coming in by 4 cents over the last 60 days and next quarter moving higher by a dime.

The Zacks Rank tends to focus more on the annual number and that has moved from $3.49 to $3.85 over the last 60 days.  The 2020 number has also seen a nice move higher, running from $4.29 to $4.64 over the same time period.

Valuation

I see an 18x forward PE and that is in line with the broader market.  The 2.3x book multiple will have the value investors wanting to kick the tires a little more, while the growth investors aren't excited by the small topline growth of just 2.8% from the previous quarter.  I see a 0.4x price to sales multiple, which suggests the market doesn't give that much weight to incremental sales.  

In summary, estimates are moving higher and that often brings the stock along for the ride.  XPO does have a checkered past and margins are tight and trending lower.  That said, small changes can have a big impact if expenses are cut and earnings continue to grow.

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