GXO Logistics, Inc. (GXO) Stock Analysis
GXO Logistics, Inc. (GXO) Stock Analysis
Overall Grade: F (Concerning)
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GXO Logistics, Inc. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 2.3% | Below expectations |
| FCF Margin | 0.6% | Cash flow pressure |
| Debt/Equity | 0.7x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is GXO Logistics, Inc.'s Profitability and ROIC?
GXO Logistics, Inc.'s return on invested capital of 2.3% is below the typical cost of capital.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 2.3% | Red flag | Below cost of capital |
| Return on Equity (ROE) | 3.0% | Warning | Moderate equity returns |
| Operating Margin | 2.0% | Warning | Moderate operational efficiency |
How Strong is GXO Logistics, Inc.'s Cash Flow Quality?
GXO Logistics, Inc. generated $77.0M in free cash flow over the trailing twelve months, representing a 0.6% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 5.1x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 0.6% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $77.0M | Good | Positive cash generation |
| OCF/Net Income | 5.1x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is GXO Logistics, Inc.'s Financial Health?
GXO Logistics, Inc.'s debt-to-equity ratio of 0.7x indicates moderate leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.7x | Adequate | Moderate leverage |
| Net Cash Position | $-1.8B | Warning | Net debt position |
Is GXO Logistics, Inc. Stock Overvalued or Undervalued?
GXO Logistics, Inc. trades at a P/E of 67.8x, representing a premium to the sector median of N/A. Free cash flow yield of 1.2% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 67.8x | Warning | Premium valuation |
| EV/Sales | 0.6x | Excellent | Attractive revenue multiple |
| FCF Yield | 1.2% | Warning | Lower cash yield |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 2.3% | Bottom 25% | 0.3x below |
| Free Cash Flow Margin | 0.6% | Bottom 50% | 0.1x below |
| Operating Margin | 2.0% | Bottom 25% | 0.3x below |
| Return on Equity (ROE) | 3.0% | Bottom 50% | 0.3x below |
| P/E Ratio | 67.8x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 2.3% (Red flag - Bottom 25% of sector (median: 6.7%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 0.6% (Warning - Bottom 50% of sector (median: 4.3%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 73.6% (Adequate)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 67.8x (Warning)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 1.2% (Warning)
Frequently Asked Questions
Q: What is GXO Logistics, Inc.'s Return on Invested Capital (ROIC)?
GXO Logistics, Inc. (GXO) has a trailing twelve-month Return on Invested Capital (ROIC) of 2.3%. This compares below the sector median of 6.7%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is GXO Logistics, Inc.'s Free Cash Flow Margin?
GXO Logistics, Inc. (GXO) has a free cash flow margin of 0.6%, generating $77.0 million in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is GXO Logistics, Inc. stock overvalued or undervalued?
GXO Logistics, Inc. (GXO) trades at a P/E ratio of 67.8x, which is above the sector median of N/A. The EV/Sales multiple is 0.6x. Free cash flow yield is 1.2%, reflecting growth expectations priced into the stock.
Q: How much debt does GXO Logistics, Inc. have?
GXO Logistics, Inc. (GXO) has a debt-to-equity ratio of 0.7x with total debt of $2.2 billion. Net debt position is $1.8 billion.
Q: What is GXO Logistics, Inc.'s revenue and earnings growth?
GXO Logistics, Inc. (GXO) grew revenue by 16.9% year-over-year. Earnings per share decreased by 14.4% compared to the prior year. Solid growth above 10% suggests healthy business momentum.
Q: Is GXO Logistics, Inc. buying back stock?
GXO Logistics, Inc. (GXO) repurchased $200.0 million of stock over the trailing twelve months. This represents a buyback yield of 3.2%.
Q: How does GXO Logistics, Inc. compare to competitors in Transportation?
Compared to other companies in Transportation, GXO Logistics, Inc. (GXO) shows: ROIC of 2.3% is below the sector median of 6.7% (Bottom 22%). FCF margin of 0.6% trails the sector median of 4.3% (Bottom 28% of sector). These rankings are based on MetricDuck's analysis of all Transportation companies with available SEC filings.
Q: What warning signs should I watch for with GXO Logistics, Inc.?
Investors in GXO Logistics, Inc. (GXO) should monitor these potential warning signs: 1) FCF margin is thin at 0.6%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q3 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.