Assessing XPO Stock After the 4.6% Monthly Pullback and Cash Flow Forecasts for 2025

If you are holding XPO right now or considering adding it to your portfolio, you are probably wrestling with a classic investor’s dilemma: should you buy in, hold tight, or look elsewhere? It is a valid question, especially after the stock’s recent dips, with XPO slipping 3.7% in the last week and 4.6% over the past month. Yet when you zoom out, the picture looks dramatically different. The stock has soared 13.0% over the past year, an incredible 376.6% in the last three years, and an impressive 322.7% over five years. That kind of long-term return simply cannot be ignored, but it also prompts a fair question about risk and whether the company is still a buy at current levels.

Market watchers have pinned recent volatility on broader market swings and shifting investor sentiment within the transportation and logistics sector. Even with these near-term bumps, XPO has kept much of its staggering long-term growth. Now, with a value score of just 1 out of 6 on common undervaluation checks, some are wondering if there is real value left or if the best gains are in the rearview mirror.

To answer that, let’s break down how XPO stacks up across different valuation methods, from traditional ratios to more nuanced comparisons, before uncovering a smarter angle on what makes a good value stock.

XPO scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: XPO Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting future cash flows and then discounting them back to today’s dollars. For XPO, this process uses a two-stage method focused on Free Cash Flow to Equity, relying on both analyst estimates for the next five years and algorithmic extrapolation for the years beyond.

Currently, XPO’s last twelve months of Free Cash Flow was negative at $-173.6 million. Analysts expect this number to rise, projecting Free Cash Flow to reach $891 million by 2029. In subsequent years, models extrapolate steady growth, with annual Free Cash Flow exceeding $1.3 billion by 2035. All projections are reported in USD. This gradual increase highlights significant anticipated operational improvements and market expansion.

The DCF model places XPO’s fair value at $144.34 per share. Comparing this to the current share price shows that the stock is trading at a 12.7% discount to its estimated intrinsic value, suggesting it is undervalued based on future cash flows.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests XPO is undervalued by 12.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: XPO Price vs Earnings

For profitable companies, the Price-to-Earnings (PE) ratio is a widely used and practical valuation metric. The PE ratio shows how much investors are willing to pay for a dollar of earnings, making it especially useful for gauging market expectations in established businesses. Growth prospects and company-specific risks influence what qualifies as a “normal” or fair PE ratio. Rapidly growing companies or those with lower risk profiles typically justify higher PE ratios, while slower growth or higher-risk firms usually see lower ones.

XPO currently trades at a PE ratio of 43.0x, which stands noticeably above both the industry average of 23.5x and its peers’ average of 27.4x. At first glance, this elevated multiple could indicate the stock is priced for exceptional growth or perhaps carries additional risk. To put this number into greater context, Simply Wall St has developed a proprietary “Fair Ratio,” which, for XPO, stands at 17.6x. The Fair Ratio adjusts for factors such as forecasted earnings growth, profit margins, size, and sector-specific dynamics. This offers a more tailored benchmark than industry or peer averages.

Since XPO’s actual PE multiple sits well above its Fair Ratio, this analysis suggests the stock may be trading at a premium relative to its fundamentals and outlook. As a result, investors should recognize that while XPO’s growth has been strong, its shares appear priced for even more.

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 XPO Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal investment story: a way to connect your unique outlook and assumptions about a company, like its potential for revenue or earnings growth, with a financial forecast and fair value, all in one place. Narratives let you spell out what you believe drives XPO’s business, such as AI-powered efficiency or exposure to freight market cycles, and then see how those assumptions translate into a target valuation.

On Simply Wall St’s platform, millions of investors use Narratives within the Community page to test, publish, and update their outlooks. Narratives are powerful because they make investment decisions more transparent. You can clearly see if your estimated fair value is above or below the current price, so you know when to buy, hold, or sell. As news or earnings are released, Narratives update automatically, keeping your view relevant without extra work.

For example, one investor might set a bullish Narrative for XPO based on strong expansion and AI modernization, landing on a fair value as high as $156 per share. Another may see downside risk and choose a more cautious Narrative with a fair value of just $84, all by weighting different business drivers and forecasts.

Do you think there's more to the story for XPO? 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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