NEW YORK (TheStreet) -- XPO Logistics (XPO) was shedding value on Friday. By mid-afternoon, shares had taken off 2.6% to $74.76. Trading volume of 7.2 million was nearly 13 times higher than its three-month average daily trading volume of 575,000.
On Monday, the micro-cap freight transportation company issued fourth-quarter guidance below expectations. Management expects revenue between $256 million and $258 million, 135% higher than a year earlier but below the $268.7 million analysts surveyed by Thomson Reuters had expected. Gross profit is expected in the range of $52.5 million to $53.5 million.
TheStreet Ratings team rates XPO LOGISTICS INC as a Hold with a ratings score of C. The 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 deteriorating net income, disappointing return on equity 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 4.1%. Since the same quarter one year prior, revenues leaped by 173.3%. 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 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, XPO has a quick ratio of 2.28, which demonstrates the ability of the company to cover short-term liquidity needs.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Air Freight & Logistics industry. The net income has significantly decreased by 91.4% when compared to the same quarter one year ago, falling from -$3.15 million to -$6.03 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
- You can view the full analysis from the report here: XPO Ratings Report