Is QXO Still Attractive After Its 42% Rally and DCF Upside in 2025?

• If you are wondering whether QXO is still a smart buy after its recent run, or if you have already missed the real upside, this breakdown will help you assess whether the current price makes sense.
• QXO has pulled back about 1.1% over the last week, but it is still up roughly 31.1% over the past month and 42.4% year to date. This suggests the market is quickly reassessing its long term potential and risk profile.
• That shift in sentiment has been supported by a series of strategic updates, including management commentary on sharpening QXO's focus on its core industrial distribution platform and pursuing bolt on acquisitions to scale. Investors have also been reacting to broader sector optimism in capital goods and industrial technology, which tends to lift companies like QXO when growth and efficiency stories start to gain traction.
• Right now QXO scores a 3 out of 6 on our valuation checks. This means it screens as undervalued on half of the key metrics we track, but not all of them. Next we will unpack what that score means by looking at different valuation approaches, then finish with a more detailed way to connect valuation to the real narrative behind the stock.

QXO delivered 35.8% returns over the last year. See how this stacks up to the rest of the Trade Distributors industry.

Approach 1: QXO Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in dollar terms.

For QXO, the latest twelve month Free Cash Flow is about $78.8 million. Analysts have provided detailed forecasts out to 2029, and beyond that Simply Wall St extrapolates the trend. On this basis, QXO’s Free Cash Flow is projected to rise to roughly $2.33 billion by 2035, reflecting very strong expected growth from its current base as the industrial distribution platform scales.

Putting all of those projected cash flows together in a 2 Stage Free Cash Flow to Equity model gives an estimated intrinsic value of about $43.14 per share. Compared with the current share price, this suggests QXO is trading at roughly a 49.3% discount to its DCF value, indicating the market may still be skeptical about how much of that growth will ultimately be realized.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests QXO is undervalued by 49.3%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for QXO.

Approach 2: QXO Price vs Sales

For companies that are still ramping profitability but already generating meaningful revenue, the Price to Sales, or P S, ratio is often a more reliable yardstick than earnings based metrics that can be distorted by one off items or heavy reinvestment. Investors generally accept that a higher P S multiple can be justified when a business is growing quickly and operating in an attractive industry. However, that premium should also reflect the risks around margins, competition and execution.

QXO currently trades at about 3.17x sales, which is well above both the Trade Distributors industry average of roughly 1.22x and the peer group average of around 2.71x. Simply Wall St also calculates a proprietary Fair Ratio for QXO of about 5.37x, which represents the P S multiple you might reasonably expect given its growth profile, margins, industry positioning, market cap and risk factors. Because this Fair Ratio directly incorporates company specific drivers, it can be more informative than simple comparisons to peers or the broad industry, which may have very different growth and risk dynamics. With QXO’s actual P S multiple sitting below this Fair Ratio, the shares currently appear attractively valued on a sales basis.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1455 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your QXO Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply the story you believe about a company, translated into numbers like fair value, future revenue, earnings and margins. A Narrative connects three things: what you think QXO will achieve operationally, how that flows into a financial forecast, and the fair value estimate that drops out at the end. On Simply Wall St, millions of investors use Narratives on each company’s Community page as an easy, accessible tool to frame their decisions, then compare their fair value to the current share price to help decide whether to buy, hold or sell. Because Narratives on the platform update dynamically when new information such as earnings or major news arrives, your valuation can evolve automatically alongside QXO’s story. For example, one QXO Narrative might assume rapid industrial consolidation and assign a much higher fair value, while another might bake in slower growth and execution risk and arrive at a far lower number, yet both are using the same structured approach to link story to valuation.

Do you think there's more to the story for QXO? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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