Is GXO Logistics a Bargain After Strong Q1 Earnings Beat and 28% Rally in 2025?

Thinking about what to do with your GXO Logistics shares, or wondering if now is the right time to get in? You're not alone. GXO has attracted attention recently, with the stock rising 4.7% in the past week and climbing 5.3% over the last month. Zoom out a bit further and that growth increases, with the shares up a healthy 28.7% year-to-date and an impressive 58.1% over the past three years. Even with global supply chain headlines constantly shifting, GXO seems to be capturing the upside of a logistics world in transition.

Why is the stock moving the way it is? Beyond general improvements in global shipping demand and a renewed focus on automation in warehousing, investors are also re-evaluating risk. While supply chain issues have been a risk in the sector, recent market optimism signals a belief that GXO is well-positioned for the next phase of logistics growth.

Of course, deciding what GXO is really worth comes down to valuation. By the numbers, GXO scores a 2 out of 6 based on a set of common value checks, signaling it is undervalued in a couple of areas but not broadly across the board. But is that the full story?

In the next section, we will break down the details behind each valuation approach and then examine an even smarter way of sizing up GXO's true value potential.

GXO Logistics scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: GXO Logistics Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and then discounting them back to today’s dollars. It helps investors understand what those future dollars are worth in the present, based on realistic growth assumptions and risk factors.

For GXO Logistics, the DCF analysis starts with a current Free Cash Flow of $47 million. Analysts provide detailed estimates for the next five years. Beyond that, growth is extrapolated to forecast the company’s cash generation out to 2035. According to these projections, GXO’s Free Cash Flow could reach $514 million in 2028 and may climb as high as $1.018 billion by 2035 if recent growth trends persist.

All of these future cash flows are discounted to reflect their value in today’s terms. After running the numbers, the model estimates GXO’s intrinsic value at $98.20 per share. Compared to the current share price, this implies the stock is trading at a 43.6% discount. This suggests it is significantly undervalued based on the DCF approach.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests GXO Logistics is undervalued by 43.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: GXO Logistics Price vs Earnings

For companies that are generating consistent profits, the Price-to-Earnings (PE) ratio is a widely used metric because it directly relates a company’s share price to its earnings. It is especially helpful for investors when assessing whether the market is pricing in the company's future growth and how much risk is being considered relative to its profitability.

Growth expectations and risk both play big roles in determining what a “normal” PE ratio should be. If a business is expected to grow its profits quickly and has fewer risks involved, investors will typically pay a higher PE. On the flip side, lower growth or increased uncertainty demand a lower PE, even for reliable companies.

Looking at the numbers, GXO Logistics currently trades at a lofty PE ratio of 100.7x. For context, that is far above the Logistics industry average of 15.9x and higher than the average of its peers at 20.8x. However, Simply Wall St’s proprietary Fair Ratio, calculated specifically for GXO based on growth projections, margins, risk profile, industry, and market cap, suggests a much more reasonable benchmark of 41.2x. Comparing just with industry averages or peer groups does not give the full picture, but the Fair Ratio takes into account the company’s specific characteristics and future outlook, making it a more comprehensive tool for judging value.

Since GXO’s PE of 100.7x is substantially higher than the Fair Ratio of 41.2x, the stock currently appears to be overvalued by this measure.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your GXO Logistics Narrative

Earlier, we mentioned that there is an even better way to understand valuation. Let's introduce you to Narratives. A Narrative is essentially your personal story or perspective about a company. It’s how you connect your view of GXO Logistics' business prospects to concrete forecasts like future revenue, earnings, and margins, and then arrive at your own fair value estimate.

Rather than relying solely on historical numbers or standard financial ratios, Narratives link a company's story, current events, and your assumptions to specific financial forecasts and valuation outcomes. This approach clarifies the "why" behind the numbers and empowers you to act confidently when making investment decisions.

Simply Wall St’s platform makes Narratives an accessible, easy-to-use tool. It is available to millions of investors on the Community page, where you can see and share perspectives updated dynamically as new information becomes available. By comparing each Narrative’s Fair Value with the current price, you gain a real-time, personalized decision tool.

For example, a bullish investor might set a Narrative Fair Value as high as $67.00, focusing on GXO’s automation and e-commerce strengths. A more cautious user could estimate a Fair Value closer to $52.00 due to concerns around sector risks and leadership changes.

Do you think there's more to the story for GXO Logistics? Create your own Narrative to let the Community know!

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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