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XPO Logistics Reports Record Sales as Trucking Takes Off

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Almost 80% of analysts covering XPO stock rate it at Buy.

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As the economy recovers from the disruption of Covid-19, trucking businesses are flying.

Monday evening,

XPO Logistics

reported $4.8 billion in sales, the company’s highest quarterly revenue ever. That is despite seasonal trends: In many shipping businesses, sales drop sequentially from the fourth quarter to the first quarter, after the holidays.

Wall Street was looking for about $4.3 billion in sales. Adjusted per-share earnings for the first quarter came in at $1.02, a nickel better than analysts projected.

The company also raised its full-year forecast for earnings before interest, taxes, depreciation and amortization, or Ebitda, to a range with a midpoint of $1.85 billion, from about $1.75 billion. The consensus view on Wall Street before the news was that Ebitda would be $1.78 billion.

Analysts and investors tend to focus on XPO’s Ebitda figures, but the company also increased its projections for full-year earnings and free cash flow. Shares were up about 1% in after-hours trading.

“Our truck brokerage business is continuing to outperform the market,” said CEO
Bradley Jacobs
in the company’s news release. North American trucking profit margins improved as shipping volume and prices made gains. And “In logistics, our record first quarter revenue of $1.82 billion was propelled by the ‘big three’ logistics tailwinds: e-commerce, outsourcing and warehouse automation,” he said

The shares are up about 19% year to date, better than the comparable returns of the

S&P 500

and

Dow Jones Industrial Average.

Wall Street is upbeat. Almost 80% of analysts covering the company rate shares Buy, while the average Buy-rating ratio for stocks in the S&P is roughly 55%. The average analyst target price is about $147, up about 4% from Monday’s close of almost $142, although those targets were set before management increased its financial guidance.

Management scheduled a conference call to discuss the results at 8:30 a.m. Eastern time Tuesday. Analysts and investors will be eager to hear about the company’s plan to split into two businesses: one focused on truck brokerage and less than truckload shipping and another dealing with outsourced logistics.

Barron’s recently wrote positively about XPO, saying fundamental factors in the trucking industry and the trend toward outsourced logistics would benefit the stock. Shares are up about 5% since that article appeared on April 22.

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