Why XPO Logistics Stock Rose in 2017



Here’s what’s going on with XPO Logistics

On December 22, 2017, Bloomberg reported news from Recode that Home Depot (HD) was considering an acquisition of XPO Logistics (XPO). XPO is a premier logistics service provider inside and outside the United States. It has been in the news the last two years after its two acquisitions in Europe and its Con-way acquisition. With these additions, XPO catapulted itself into a top LTL (less-than-truckload) service provider in the United States.

Now, leading retailer Home Depot (HD) has stated its intentions to acquire XPO. The move seems to be an effort to compete with Amazon and keep it at bay. Recode reported that Home Depot has held internal discussions on a possible $9 billion buyout of XPO.

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XPO’s stock performance

XPO Logistics’ successful integration of big-ticket acquisitions in the last two years was evident in its 2017 quarterly results. That resulted in a steady rise for XPO stock. In 2017, the stock rose to all-time highs and more than doubled since the start of the year.

On December 29, 2017, XPO stock closed at $91.60 compared to its all-time high of $93.60. It returned a phenomenal 112.2% since January 1, 2017. That was the highest return in its peer group for that period. Let’s take a look at the peer group’s returns:

  • FedEx (FDX): 34%
  • United Parcel Service (UPS): 4%
  • Old Dominion Freight Line (ODFL): 53.4%
  • YRC Worldwide (YRCW): 8.3%
  • C.H. Robinson Worldwide (CHRW): 21.6%
  • ArcBest (ARCB): 29.3%
  • SAIA (SAIA): 60.3%
  • Expeditors International of Washington (EXPD): 22.2%

The SPDR S&P Transportation ETF (XTN) rose 20.7% during the same period. It holds 24.5% in trucking stocks and 12.3% in US railroad companies.

In this short series focused on XPO Logistics, we’ll look at the company’s value proposition to the US retail industry. Then, we’ll turn to analysts for their views on the XPO-HD deal.


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