Is XPO Logistics (XPO) a Great Value Stock Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
XPO Logistics (XPO) is a stock many investors are watching right now. XPO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 16.45, which compares to its industry's average of 17.19. Over the past year, XPO's Forward P/E has been as high as 27.93 and as low as 10.30, with a median of 15.36.
We also note that XPO holds a PEG ratio of 0.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. XPO's industry currently sports an average PEG of 0.79. Within the past year, XPO's PEG has been as high as 0.97 and as low as 0.27, with a median of 0.50.
Investors should also recognize that XPO has a P/B ratio of 2.31. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.58. Within the past 52 weeks, XPO's P/B has been as high as 3.54 and as low as 1.24, with a median of 2.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. XPO has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.71.
Finally, our model also underscores that XPO has a P/CF ratio of 6.60. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. XPO's P/CF compares to its industry's average P/CF of 17.57. Over the past 52 weeks, XPO's P/CF has been as high as 13.10 and as low as 4.93, with a median of 6.51.
These are only a few of the key metrics included in XPO Logistics's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, XPO looks like an impressive value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.