XPO (XPO): Revisiting Valuation After Analyst Endorsements and Moody’s Improved Outlook

Investor interest in XPO (XPO) is getting a lift after JPMorgan reiterated its positive stance. Benchmark added the stock to its Best Ideas List, and Moody's upgraded the company's outlook to positive.

See our latest analysis for XPO.

XPO’s latest share price, at $129.38, comes after a flurry of upbeat analyst updates and a favorable new outlook from Moody’s. These developments appear to be shifting investor sentiment despite a one-day price pullback. While the share price has generally hovered in a narrow range this year, long-term investors have seen a 12% total shareholder return over the past twelve months and a remarkable 365% total return over three years, reflecting strong momentum in the company's transformation story.

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With analyst targets above the current price and improving fundamentals, the obvious question is whether XPO’s recent momentum signals an undervalued opportunity or if the market has already accounted for the company’s future growth potential.

Most Popular Narrative: 7% Undervalued

XPO’s widely followed narrative sets a fair value near $139, notably above its recent closing price of $129.38. The case for this upside centers on structural transformation within XPO’s business operations, as highlighted below.

XPO's ongoing investments in AI-powered optimization and proprietary technology are driving measurable productivity gains, even in a weak freight market, by reducing linehaul miles, improving labor efficiency, and cutting maintenance costs. As industry shipping volumes recover and these technology benefits compound, this should drive sustained margin expansion and higher net income.

Read the complete narrative.

Want a peek behind the curtain? This narrative hangs on ambitious forecasts for profit margins and future earnings, coupled with assumptions about market dominance. Ready to uncover which business shifts and bold projections are shaping this striking valuation? There is more to the story. Get the details that drive these expectations.

Result: Fair Value of $139.38 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent freight market weakness or rising labor costs could quickly challenge XPO’s growth trajectory and put earnings expectations at risk.

Find out about the key risks to this XPO narrative.

Another View: Market Multiples Tell a Cautionary Story

While the consensus points to XPO being undervalued based on future earnings, the story changes when we look at XPO’s price-to-earnings ratio. XPO trades at 44.2 times earnings, which is noticeably higher than both its industry average of 24.9 and peer average of 26.5. The market’s fair ratio, at 17.3, suggests investors should be mindful of the premium. Is the company’s growth enough to justify such a high price, or does this signal valuation risk lurking beneath the surface?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own XPO Narrative

If you have a different take or want to dig deeper into the numbers yourself, there's nothing stopping you from building your own view in just a few minutes. Do it your way

A great starting point for your XPO research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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