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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 Q3 earnings, beating estimates with $1.07 per share, a 5% increase year-over-year. The company's operating ratio improved by 150 basis points, despite a tonnage decline. XPO's less-than-truckload (LTL) segment showed strength, with the company reporting preliminary LTL operating metrics for November. Institutional investors, such as Anderson Financial Strategies LLC, increased their positions in XPO by 9.2%. Additionally, 20 brokerages have assigned a "buy" recommendation to the company, according to Marketbeat Ratings.

1.c. Company Highlights

2. XPO Logistics' Strong Q3 Earnings: A Deeper Dive

XPO Logistics reported a robust third quarter, with total company revenue rising 3% year-over-year to $2.1 billion, and LTL revenue reaching $1.3 billion. The company's adjusted EBITDA increased 3% to $342 million, while LTL adjusted EBITDA surged 9% to $308 million, a record high. However, the actual EPS of $0.683 fell short of estimates at $1.01. The LTL adjusted operating ratio improved by 150 basis points to 82.7%, significantly outperforming seasonality. The company's yield growth, excluding fuel, was 5.9% year-over-year and 3.1% sequentially, driven by its service quality and focus on a more profitable mix.

Publication Date: Nov -03

📋 Highlights
  • Strong EBITDA Growth:: Adjusted EBITDA reached $342M (+6% YoY, excluding prior quarter’s nonrecurring benefit), with LTL adjusted EBITDA hitting a record $308M (+9% YoY).
  • Margin Expansion:: LTL adjusted operating ratio improved 150 bps to 82.7%, driven by 10% YoY increase in operating income to $217M and a 350 bps margin expansion over two years.
  • Yield and Profitability Gains:: Excluding fuel, yield grew 5.9% YoY, with 11th consecutive quarter of sequential revenue per shipment growth, supported by premium services and high-margin local customers.
  • 2026 Operational Targets:: Projected 800 bps Operating Ratio (OR) improvement to reach mid-70s, 15% assessorial revenue (from 12% currently), and 40%+ free cash flow growth due to cost efficiency and yield optimization.
  • Fleet and Cost Efficiency:: Tractor fleet’s average age reduced to 3.6 years (youngest in industry), with 1% salary expense growth YoY and AI-driven productivity initiatives boosting incremental margins above 40%.

Operational Excellence

XPO's operational execution was exceptional, with the average age of its tractors decreasing to 3.6 years, making it one of the youngest fleets in the industry. The company's investments in capacity and equipment have paid off, enabling it to grow revenue per shipment, excluding fuel, sequentially for the 11th consecutive quarter. As Mario Harik, CEO, noted, "Our LTL results reflect industry-leading trajectories for profitability, cost efficiency, and operational excellence."

Margin Expansion

The company's LTL adjusted EBITDA margin expanded by 180 basis points to 24.5%, driven by strong pricing and operational execution. XPO expects to continue to outperform seasonality, with a modest sequential increase in OR in the fourth quarter, implying a 250 basis point year-over-year improvement. The company's incremental margins are expected to be comfortably above 40% due to yield growth and productivity improvements.

Valuation and Outlook

With a P/E Ratio of 51.13 and an EV/EBITDA of 17.54, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 3.9%. Given XPO's strong execution and industry-leading profitability, cost efficiency, and operational excellence, it's well-positioned to deliver above-market yield growth and continue to outperform in the LTL market. The company's ROE of 19.42% and ROIC of 9.64% also indicate a strong return on equity and invested capital.

Growth Initiatives

XPO is pursuing multiple levers for growth, including cost takeout opportunities, higher efficiency, and expanding margins in Europe, with the goal of selling the European business and becoming a pure-play North American LTL carrier. The company is also leveraging AI to improve its pricing and sales processes, with the rollout of AI pricing bots and tools to assist salespeople. With its strong track record of continuous improvement, XPO is well-positioned for years of outperformance going forward.

3. NewsRoom

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XPO Provides North American LTL Operating Data for November 2025

Dec -01

Source: globenewswire.com

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Stock Traders Purchase High Volume of XPO Put Options (NYSE:XPO)

Nov -29

Source: defenseworld.net

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XPO, Inc. $XPO Shares Acquired by Anderson Financial Strategies LLC

Nov -18

Source: defenseworld.net

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XPO Recognized as a Top Military Friendly® Employer for 2026

Nov -11

Source: globenewswire.com

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XPO: Fundamentals And Technicals Exciting, But Getting An Entry Point Is Challenging

Nov -05

Source: seekingalpha.com

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XPO Speeds Past the Competition Again. AI Could Give It Another Leg Up

Nov -02

Source: fool.com

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XPO, Inc. (NYSE:XPO) Given Consensus Rating of “Moderate Buy” by Analysts

Nov -01

Source: defenseworld.net

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XPO, Inc. (XPO) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

149.05$

Current Price

149.05$

Potential

-0.00%

Expected Cash-Flows