Over the past six months, XPO’s stock price fell to $198.81. Shareholders have lost 5.3% of their capital, which is disappointing considering the S&P 500 has climbed by 11.3%. This might have investors contemplating their next move.
Is now the time to buy XPO, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is XPO Not Exciting?
Even though the stock has become cheaper, we’re sitting this one out for now. Here are three reasons we avoid XPO, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, XPO’s sales grew at a tepid 4.5% compounded annual growth rate over the last five years. This was below our standard for the industrials sector.
2. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for XPO, its EPS declined by 2.7% annually over the last five years while its revenue grew by 4.5%. This tells us the company became less profitable on a per-share basis as it expanded.
3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
XPO has shown poor cash profitability relative to peers over the last five years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 1.6%, below what we’d expect for an industrials business.
Final Judgment
XPO isn’t a terrible business, but it doesn’t pass our bar. Following the recent decline, the stock trades at 34.5× forward P/E (or $198.81 per share). At this valuation, there’s a lot of good news priced in - we think other companies feature superior fundamentals at the moment. We’d suggest looking at the Amazon and PayPal of Latin America.
Stocks We Would Buy Instead of XPO
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
