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XPO’s Stock Price Continues to Soar: Investors Showing Confidence in the Company


Key Points
XPO Logistics stock is experiencing significant growth during Friday’s trading session.
Investors have strong faith in the company’s potential for future success.
Despite some minor contractions throughout the year, the market is focusing on the prospects of XPO.
5 stocks we like better than Schneider National
Shares of XPO NYSE: XPO have been skyrocketing since the first quarter of 2023, exceeding expectations and delivering an impressive 165% increase in less than six months.
While some market participants believe this rally may be losing momentum, it is difficult to go against the trend.
During Friday’s trading session, XPO Logistics stock rose by up to 8% as investors digested the latest second-quarter 2023 earnings release. Traders and other participants are looking for positive developments that could further drive the stock’s momentum, while skeptics are keeping an eye out for any signs of a slowdown and subsequent pullback.
Skeptics will not only have to contend with the significant upward trend in the stock, but also with the overall market sentiment that is favoring this stock. As the stock approaches double-digit growth and aims to surpass its recent all-time high, it presents a positive outlook for the company despite some cyclical slowdowns in its financial performance.
Where is the Market Vote?
Examining initial market trends, often referred to as the “popularity contest,” can be a valuable tool for investors seeking to understand sector favoritism. Since bias usually leads to higher returns and sustained momentum, analyzing the differential returns in the logistics and trucking sectors can provide an initial framework.
XPO has outperformed other mid-capitalization competitors (companies valued between $2 billion to $10 billion), surpassing companies like ArcBest NASDAQ:ARCB and Schneider National NYSE:SNDR. In the past 12 months, ArcBest gained a respectable 34.5%, while Schneider rose by 28.2%. Although these rates of return may be satisfactory for most investors, those who have invested in XPO would likely be envious of their success. Comparatively, XPO is valued more highly in terms of its forward price-to-earnings ratio, which considers the expected earnings for the next 12 months, in contrast to the past 12 months used in the traditional P/E ratio.
The market places a higher perceived value and “quality” on each dollar of future earnings expected from XPO. In comparison, peers like ArcBest and Schneider trade at lower valuations of 12.0x and 13.9x, respectively. Value investors should take this into consideration.
Outlook-Driven Markets
In the company’s second-quarter investor presentation, management outlines the value proposition behind investing in XPO. The company aims to maintain key performance indicators within a specific range from 2021 to 2027, while also considering market confidence through valuation multiples and price performance.
XPO experienced a slight decline in revenue, 6.3%, primarily due to lower fuel surcharge revenue influenced by the volatility in oil markets. Looking ahead, if the company can sustain revenue within management’s projected range of 6% to 8% in the coming years, it would be a positive outcome, particularly for a company of this size.
Before considering Schneider National, it’s worth noting that MarketBeat tracks Wall Street’s top-rated research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified five stocks that analysts highly recommend buying before they become popular in the broader market, and Schneider National did not make the list. While analysts currently rate Schneider National as a “Moderate Buy,” these top-rated analysts believe that these five stocks are even better investment opportunities. View the five stocks here. MarketBeat has also released a report listing 10 undervalued stocks that have been overlooked by the market. To see which companies made the list, click the link below to access the free report.

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