Results: GXO Logistics, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

GXO Logistics, Inc. (NYSE:GXO) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. GXO Logistics reported US$2.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.55 beat expectations, being 5.0% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for GXO Logistics

After the latest results, the 14 analysts covering GXO Logistics are now predicting revenues of US$10.5b in 2024. If met, this would reflect a solid 8.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 45% to US$2.46. In the lead-up to this report, the analysts had been modelling revenues of US$10.8b and earnings per share (EPS) of US$2.57 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the US$69.50 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on GXO Logistics, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$53.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await GXO Logistics shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that GXO Logistics' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.7% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% per year. Even after the forecast slowdown in growth, it seems obvious that GXO Logistics is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded GXO Logistics' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for GXO Logistics going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for GXO Logistics that you should be aware of.

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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.