NEW YORK ( TheStreet) -- XPO Logistics Inc (AMEX: XPO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 6.6%. 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.
  • XPO's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 6.46, which clearly demonstrates the ability to cover short-term cash needs.
  • XPO LOGISTICS INC has exprienced 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, XPO LOGISTICS INC increased its bottom line by earning $0.60 versus $0.24 in the prior year. For the next year, the market is expecting a contraction of 43.3% in earnings ($0.34 versus $0.60).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Air Freight & Logistics industry and the overall market, XPO LOGISTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for XPO LOGISTICS INC is rather low; currently it is at 18.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.40% trails that of the industry average.

XPO Logistics, Inc. provides third-party logistics services using a network of relationships with ground, sea, and air carriers in the United States, Mexico, and Canada. It operates in three segments: Express-1, Concert Group Logistics, and Bounce Logistics. The company has a P/E ratio of 21.9, equal to the average transportation industry P/E ratio and above the S&P 500 P/E ratio of 17.7. XPO Logistics has a market cap of $101.1 million and is part of the services sector and transportation industry. Shares are up 19.6% year to date as of the close of trading on Tuesday.

You can view the full XPO Logistics Ratings Report or get investment ideas from our investment research center.
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