XPO Logistics' Self-Help Efforts Running Into Cooler Sentiment

 

Writing about XPO Logistics (XPO) almost a year ago, I thought the shares offered upside on solid execution in a tight market for truck freight. Unfortunately, while execution in the brokerage operation has been good, the same cannot be said of the less-than-truckload business. On top of that, the less-than-truckload (or LTL) sector has definitely cooled since late 2021, with concerns about a peak in the cycle.

XPO shares have been a notable laggard, but management has stepped up to address the shortfalls in the LTL business with a multipoint plan to improve service quality and efficiency and drive growth in 2022 and beyond. I don’t see XPO becoming a top player in the space in terms of operating metrics, but given the current valuation they don’t really need to be. While I do have some ongoing concerns about sentiment and “fighting the tape” with investors seemingly having moved on from the sector, the valuation here is enough to get my attention.

 

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XPO Logistics' Self-Help Efforts Running Into Cooler Sentiment