XPO
XPO Logistics, Inc.
$215.02
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 192.6% above fair value
You pay
$215.02
Bear
$29.38
Fair
$73.50
Bull
$117.52
Bear
$29.38
-86.3%
$2.95 × 4x + net cash
Fair
$73.50
-65.8%
$2.95 × 6x + net cash
Bull
$117.52
-45.3%
$2.95 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.95)
Implied Market Multiple
72.9x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $227.77 from 32 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $73.50 per share.
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 8415.2x 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 $227.77 (from 32 analysts). Our estimate is 97% 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