One-glance verdict
Overvalued
$4.64 our estimate vs market $19.79
Wall Street consensus: $24.56 (429.3% higher than our fair-value estimate)
327% above our estimate, beyond the bull case
Fundamentals snapshot
RXO, Inc.
RXO · NYQ · Industrials · Trucking
Current price
$19.79
52-week range
$10.43 - $29.90
Market cap
$3.26B
Balance sheet
Distressed
-0.20x Concerning
Net debt $713.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 6.0% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Net debt grew 25.8% over 3 years.
- Risk Return on equity was -6.8% last year — the company lost money on shareholders' equity.
What this company does
RXO, Inc.
RXO is like a matchmaker for shipping, connecting companies that have goods to move with trucking companies that have available space. The company earns its money by taking a fee for arranging these shipments, which keeps its own costs low since it doesn't own the trucks. This service is a crucial part of the supply chain (the entire network that gets a product from the factory to you), helping countless other businesses run smoothly.
How the company got here
RXO was formed in November 2022 when a larger transportation company, XPO, decided to separate its technology-focused brokerage business into a new, independent entity. The businesses that make up RXO were built within XPO over the 2010s through growth and the purchase of other companies. This separation allows RXO to focus on being an "asset-light" company, meaning it doesn't own the large fleets of trucks and trailers itself. Instead, it acts as a matchmaker, using technology to connect companies that need to ship goods with available third-party carriers. In June 2024, RXO announced a major move to grow its business by agreeing to buy Coyote Logistics, another large brokerage company, from UPS.
What it actually does
Think of RXO as a high-tech matchmaker for the shipping world. If a company needs to move a truckload of products from a factory to a warehouse, they call RXO. RXO then uses its technology platform, called RXO Connect, to find a trucking company with an empty truck heading in the right direction. It coordinates the entire process without owning the trucks, focusing on making the process efficient for both the shipper and the carrier. This service is used by a wide range of industries, from retail and e-commerce to manufacturing and food and beverage companies.
Truck Brokerage
This is the heart of RXO's business and its largest source of revenue (the money it makes from sales). When a company has a full or partial truckload of goods to ship, RXO finds a third-party trucking company to transport it. RXO's technology platform helps automate this process, finding the right truck for the right price and providing real-time tracking of the shipment. Shippers pay RXO for finding a reliable carrier and managing the logistics, and RXO pays the carrier for the actual transportation.
Last Mile
This segment handles the final step of the delivery process, bringing bulky items like furniture, appliances, and exercise equipment directly to a consumer's home or a job site. RXO manages one of the largest networks for this type of specialized delivery in North America, serving major retailers and e-commerce companies. This is a significant and growing part of RXO's business, focusing on a crucial part of the online shopping experience.
Managed Transportation
Think of this as outsourcing a company's entire shipping department to RXO. Instead of just finding a truck for a single shipment, RXO manages a client's entire transportation function, from planning routes and selecting carriers to optimizing their supply chain (the entire process of making and selling goods). This is a more comprehensive service for larger companies that want an expert to handle all their shipping needs efficiently.
Freight Forwarding
This is a smaller part of RXO's business that handles the complexities of shipping goods internationally. This includes coordinating transportation by ocean or air, handling customs paperwork, and managing cross-border logistics. Essentially, RXO acts as an agent to navigate the different carriers and regulations involved in moving products from one country to another.
What management is betting on now
RXO's leadership is heavily focused on using technology, especially its RXO Connect platform, to make the freight-matching process more automated and efficient. A key goal is to gain a larger share of the highly fragmented truck brokerage market, where thousands of smaller companies compete. They also aim to expand their relationships with large customers by cross-selling their different services, like offering managed transportation to a client that already uses their brokerage. Finally, the company is focused on maintaining cost discipline, which means carefully managing expenses, especially in a freight market where prices can go up and down.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-18.00M
FY2024 Q4
$-19.00M
FY2025 Q1
$-17.00M
FY2025 Q2
$9.00M
FY2025 Q3
$9.00M
FY2025 Q4
$-9.00M
FY2026 Q1
$-24.00M
FY2026 Q2
$-52.00M
Revenue
$1.77B
Net income
$-9.00M
Diluted EPS
-0.05
Operating cash flow
$-40.00M
Free cash flow
$-52.00M
Fetching…
Sources
Revenue
$1.43B
Net income
$-36.00M
Diluted EPS
-0.21
Operating cash flow
$-7.00M
Free cash flow
$-24.00M
Fetching…
Sources
Revenue
$1.47B
Net income
$-46.00M
Diluted EPS
-0.28
Operating cash flow
$7.00M
Free cash flow
$-9.00M
Fetching…
Sources
Revenue
$1.42B
Net income
$-14.00M
Diluted EPS
-0.08
Operating cash flow
$23.00M
Free cash flow
$9.00M
Fetching…
Sources
Revenue
$1.42B
Net income
$-9.00M
Diluted EPS
-0.05
Operating cash flow
$23.00M
Free cash flow
$9.00M
Fetching…
Sources
Revenue
$1.43B
Net income
$-31.00M
Diluted EPS
-0.18
Operating cash flow
$-2.00M
Free cash flow
$-17.00M
Fetching…
Sources
Revenue
$1.67B
Net income
$-25.00M
Diluted EPS
-0.17
Operating cash flow
$-7.00M
Free cash flow
$-19.00M
Fetching…
Sources
Revenue
$1.04B
Net income
$-243.00M
Diluted EPS
-1.81
Operating cash flow
$-7.00M
Free cash flow
$-18.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $4.64 vs current price $19.79
Wall Street consensus is the average analyst price target: $24.56 (429.3% higher than our fair-value estimate).
Our most-likely fair value is $4.64 a share — about 76.6% below today's price of $19.79, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $713.0M. Interest coverage -0.2x.
Net debt
$713.00M
Interest coverage
-0.20x
RXO, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
RXO
BASELINE
RXO, Inc.
Total debt $728.00M Interest coverage -0.20x This is the baseline the peer rows are being compared against.
Total debt $1.97B Interest coverage 10.96x This peer still has a real interest-payment cushion, while RXO does not.
Total debt $139.10M Interest coverage 46.98x This peer still has a real interest-payment cushion, while RXO does not.
Total debt $498.76M Interest coverage 9.61x This peer still has a real interest-payment cushion, while RXO does not.
Total debt $2.69B Interest coverage 1.94x This peer still has a real interest-payment cushion, while RXO does not.
Total debt $1.40B Interest coverage 11.50x This peer still has a real interest-payment cushion, while RXO does not.
What you should know
The case for and against RXO
2 Rewards
3 Risks
Rewards
-
Revenue grew 6.0% last year.
-
Free cash flow was positive in 3/10 years.
Risks
-
Net debt grew 25.8% over 3 years.
-
Return on equity was -6.8% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 4.6% to 0.7% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
32.47x
P/B
2.17x
P/S
0.54x
EV/EBITDA
43.23x
PEG ratio
172.13x
Profitability
How much profit each dollar creates
Gross margin
14.9%
Operating margin
0.7%
Net margin
-1.7%
ROE
-6.8%
ROA
-0.3%
Health
Liquidity and balance-sheet strength
Debt / equity
0.48x
Current ratio
1.27x
Quick ratio
1.19x
Total debt
$728.00M
Total cash
$15.00M
Growth
How the business has been compounding
Revenue TTM
$6.09B
Revenue 5Y CAGR
5.2%
EPS TTM
-0.62
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$-17.00M
Free CF TTM
$-8.00M
FCF margin
-0.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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