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Should Value Investors Buy XPO Logistics (XPO) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is XPO Logistics (XPO - Free Report) . XPO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors will also notice that XPO has a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. XPO's industry has an average PEG of 0.78 right now. Within the past year, XPO's PEG has been as high as 0.97 and as low as 0.27, with a median of 0.51.

Investors should also recognize that XPO has a P/B ratio of 2.26. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.52. Within the past 52 weeks, XPO's P/B has been as high as 3.54 and as low as 1.24, with a median of 2.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. XPO has a P/S ratio of 0.37. This compares to its industry's average P/S of 0.7.

These figures are just a handful of the metrics value investors tend to look at, but they help show that XPO Logistics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, XPO feels like a great value stock at the moment.


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