XPO
XPO Logistics, Inc.
$193.10
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 1090.1% above fair value
You pay
$193.10
Bear
$11.80
Fair
$16.23
Bull
$20.65
Bear
$11.80
-93.9%
$2.95 × 4x
Fair
$16.23
-91.6%
$2.95 × 6x
Bull
$20.65
-89.3%
$2.95 × 7x
Adjust Assumptions
5.5x
2.95$
Key Value Driver
Through-cycle normalized EPS ($2.95)
Implied Market Multiple
65.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (32 analysts)
$231.85
Divergence from AlphaVal
93%
Summary
Using 7-year normalized EPS of $2.95 at a 6x cycle multiple, the base-case value is $16.23 per share. P/TBV cross-check: 7536.5x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 7536.5x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $231.85 (from 32 analysts). Our estimate is 93% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing