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Where XPO Logistics Europe SA (EPA:XPO) Stands In Terms Of Earnings Growth Against Its Industry

Measuring XPO Logistics Europe SA’s (ENXTPA:XPO) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess XPO’s recent performance announced on 31 December 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for XPO Logistics Europe

Were XPO’s earnings stronger than its past performances and the industry?

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to assess many different companies on a more comparable basis, using the most relevant data points. For XPO Logistics Europe, its latest trailing-twelve-month earnings is €119.70M, which, in comparison to the prior year’s figure, has risen by 40.06%. Given that these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for XPO’s earnings, which stands at €68.12M This shows that, on average, XPO Logistics Europe has been able to steadily improve its net income over the last few years as well.

ENXTPA:XPO Income Statement Apr 27th 18
ENXTPA:XPO Income Statement Apr 27th 18

What’s the driver of this growth? Let’s see whether it is solely due to an industry uplift, or if XPO Logistics Europe has experienced some company-specific growth. The climb in earnings seems to be bolstered by a strong top-line increase outstripping its growth rate of costs. Though this has caused a margin contraction, it has made XPO Logistics Europe more profitable. Looking at growth from a sector-level, the FR logistics industry has been growing its average earnings by double-digit 40.06% over the past twelve months, and a more subdued 5.18% over the previous five years.

What does this mean?

XPO Logistics Europe’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research XPO Logistics Europe to get a more holistic view of the stock by looking at:

  1. Financial Health: Is XPO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  2. Valuation: What is XPO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether XPO is currently mispriced by the market.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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