NEW YORK (TheStreet) -- Shares of XPO Logistics Inc (XPO) - Get Report are surging, up 15.15% to $48.88 on very heavy volume in afternoon trading Wednesday, following the company's announcement that it will acquire French contract logistics provider Norbert Dentressangle for $3.53 billion, Reuters reports.
Founder Norbert Dentressangle will sell his 67% stake in the company for about $239 per share. Through the acquisition deal, XPO will gain access to Europe's largest fleet network, Reuters added.
This morning, FBR Capital analysts said in a note that XPO Logistics's acquisition of Norbert Dentressangle is a "break-out" deal.
The firm believes that XPO could eventually be worth in the $8 billion to $10 billion range, or three times its current share levels.
Lyon-based Norbert Dentressangle is engaged in the provision of transport services and global logistics solutions. The company provides warehousing, stock management, order picking, air transportation and other services.
About 6.11 million shares of XPO have exchanged hands as of 2:15 p.m. ET today, compared to its average trading volume of about 614,146 shares a day.
Greenwich, CT-based XPO Logistics is a logistics provider of transportation logistics services in North America.
The company is a provider of intermodal services, the provider of last mile logistics for heavy goods, the manager of expedited shipments, and the provider of highly engineered, technology-enabled contract logistics.
Separately, TheStreet Ratings team rates XPO LOGISTICS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate XPO LOGISTICS INC (XPO) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- XPO's very impressive revenue growth greatly exceeded the industry average of 3.4%. Since the same quarter one year prior, revenues leaped by 222.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.12, which clearly demonstrates the ability to cover short-term cash needs.
- XPO LOGISTICS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, XPO LOGISTICS INC continued to lose money by earning -$1.98 versus -$2.50 in the prior year. This year, the market expects an improvement in earnings (-$0.18 versus -$1.98).
- The gross profit margin for XPO LOGISTICS INC is rather low; currently it is at 16.26%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.20% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$8.04 million or 69.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: XPO Ratings Report