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Can XPO Logistics Exceed Analysts’ Revenue Estimates in 1Q18?


Apr. 27 2018, Published 7:10 a.m. ET

1Q18 revenue estimates

According to analysts polled by Thomson Reuters, XPO Logistics (XPO) is expected to earn revenues of $3.9 billion in 1Q18, up 10.7% YoY (year-over-year). For 2018, analysts anticipate that XPO will earn $16.6 billion in revenues, up 8% YoY. Let’s look now at the key factors that could impact its revenues in 1Q18 and beyond.

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Factors impacting the Transportation segment

XPO Logistics operates in two segments: Logistics and Transportation. Last year, the Transportation segment generated ~63% of the company’s revenues. It provides services in five key areas: freight brokerage, last-mile logistics, less-than-truckload (or LTL), full truckload, and global forwarding.

At the end of 2017, XPO’s pipeline for global sales was $3.2 billion, which makes it optimistic about its transportation business. The company hopes to increase its revenues through selective targeting of freight and a continued reduction in its fleet age. In the last-mile logistics business, XPO continues to focus on the e-commerce and retail sectors. It plans to open 30 more US last-mile hubs in 2018 to meet rising customer demand.

Drivers of the Logistics segment

The company’s Logistics segment consists of contract logistics and managed transportation businesses. Its contract logistics business in Europe continues to see a rise in demand for transportation services. XPO stated at its fiscal 4Q17 earnings call that on a global basis, it has entered into long-term contracts for its contract logistics business and is in the process of implementing two contracts every week.

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XPO is optimistic about the macroeconomic market conditions in North America and Europe. Last year, the e-commerce and retail sector made up 29% of its revenues. The company is also focussing on cross-selling its services, expanding its sales employee base, and using technology as a key differentiating factor from its competitors. It’s investing ~$450 million per year in technology, which should bode well for revenue growth in the coming quarters.

Peer revenues and growth estimates

Now let’s look at analysts’ revenue and YoY growth estimates for XPO’s peers.

  • C.H. Robinson Worldwide (CHRW): $16.1 billion, up 8.7%
  • Hub Group (HUBG): $4.3 billion, up 9.6%
  • Old Dominion Freight Lines (ODFL): $3.9 billion, up 16.3%
  • J.B. Hunt Transport (JBHT): $8.3 billion, up 16.1%
  • United Parcel Service (UPS) : $70.1 billion, up 6.5%

The iShares US Industrials (IYJ) has an exposure of 0.3% to XPO and a 6.3% exposure to US railroad companies.

In the next part, we’ll take a look at analysts’ EBITDA (earnings before interest, tax, depreciation, and amortization) estimates for XPO and its peers in 1Q18 and fiscal 2018.


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