Latest news with #RXO
Yahoo
13-06-2025
- Business
- Yahoo
1 Volatile Stock on Our Buy List and 2 to Be Wary Of
A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south. While some investors embrace risk, mistakes can be costly for those who aren't prepared. Navigating these stocks isn't easy, which is why StockStory helps you find Comfort In Chaos. That said, here is one volatile stock that could reward patient investors and two that could just as easily collapse. Rolling One-Year Beta: 1.30 With access to millions of trucks, RXO (NYSE:RXO) offers full-truckload, less-than-truckload, and last-mile deliveries. Why Are We Out on RXO? 6.2% annual revenue growth over the last two years was slower than its industrials peers Earnings per share fell by 38.8% annually over the last four years while its revenue grew, showing its incremental sales were much less profitable Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders At $16.09 per share, RXO trades at 56.9x forward P/E. Check out our free in-depth research report to learn more about why RXO doesn't pass our bar. Rolling One-Year Beta: 1.52 Originally known as InterActiveCorp and built through Barry Diller's strategic acquisitions since the 1990s, IAC (NASDAQ:IAC) operates a portfolio of category-leading digital businesses including Dotdash Meredith, Angi, and focusing on digital publishing, home services, and caregiving platforms. Why Do We Avoid IAC? Annual sales declines of 1.3% for the past five years show its products and services struggled to connect with the market during this cycle Earnings per share have contracted by 51% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance Negative returns on capital show management lost money while trying to expand the business IAC is trading at $36.50 per share, or 29.5x forward P/E. To fully understand why you should be careful with IAC, check out our full research report (it's free). Rolling One-Year Beta: 1.51 Founded by Australian co-CEOs Mike Cannon-Brookes and Scott Farquhar in 2002, Atlassian (NASDAQ:TEAM) provides software as a service that makes it easier for large teams of software developers to manage projects, especially in software development. Why Do We Love TEAM? Average billings growth of 14.7% over the last year enhances its liquidity and shows there is steady demand for its products User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends Atlassian's stock price of $197.15 implies a valuation ratio of 8.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it's free. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
Yahoo
12-06-2025
- Business
- Yahoo
Onstage in Chicago, CHRW talks tech and staffing; RXO sees language order hitting capacity
With two leading 3PLs taking the stage at the Wells Fargo Industrials and Materials Conference in Chicago Wednesday, in the middle of a freight market that still has not made their lives any easier, presenters from C.H. Robinson and RXO made their case in different ways. They did so from very different positions in the equity markets: C.H. Robinson's stock by Wednesday had risen about 11.6% in the last year. RXO's stock declined about 21.7% during that same period. There was one major overlap in what the two publicly-traded 3PLs said about the market: neither are banking on any significant upturn anytime soon. C.H. Robinson (NASDAQ: CHRW) CEO Dave Bozeman said the freight market is still in what is now a 38 to 39-month recession, 'and we have to deal with it and that's what we're doing every day.'Drew Wilkerson, the CEO of RXO (NYSE: RXO), citing several measures such as tender rejections, said 'we feel like we're coming off the bottom.' But it was other areas that stood out in the presentations for the two companies. (Both companies' presentations were webcast.) Given that it has been technology and productivity that C.H. Robinson has touted as the key driver to its success, which began showing up in its corporate earnings after the first quarter of 2024, it wasn't surprising that Bozeman and CFO Damon Lee turned to that topic in their discussion. The RXO discussion with Wilkerson and head of strategy Jared Weisfeld was more focused on the freight market. But one reason for their guarded optimism was a potential strengthening through a potential boost from enforcing the Department of Transportation's English language C.H. Robinson, some of the gains at the company have come alongside reductions in staff. Although the precise numbers are not known, they showed up in the most recent quarterly earnings report under the category of personnel expenses. In the first quarter of 2024, that spending was $379.1 million. In the first quarter of this year, it had been reduced to $348.6 million. Lee said the question about the company's head count is one that they get 'a lot.' 'But we don't really look at it that way,' he said. 'We look at it as productivity.' The key metric the company uses to measure that productivity is shipments per day per person. In the company's most recent quarterly earnings call, Michael Castagnetto, president of C.H. Robinson's North American Surface Transportation unit that is the home of its truck brokerage activities, said the segment's shipments per person per day has been growing at a double-digit pace in the past two years. He said that pace continued in the first quarter. 'If I've set a target for operating leverage and volume goes up, I may actually add a head or two,' Lee said. But given the environment in the freight market, Lee said that reducing head count at present is 'what the productivity drives us to do.' Continuing reductions in headcount are not guaranteed, according to Lee. 'Assuming volumes return to the system at some point, that productivity will show up either as head count reduction, like we've seen in this freight recession, or it will show up as increased operating leverage when volume returns.' 'Our head count reductions have not been blind,' Lee said. 'They've been very systematic. It hasn't been 'will I just reduce workforce by 10%.'' The 'vast majority' of head count has come on the customer-facing side, Lee said, 'where we're moving up the value stack with the customers.'He added that questions from investors and analysts often come down to 'how do we know you're not just going to flood people back when the volume returns?' 'Our answer is there's no reason to flood people back,' Lee said. 'The processes have fundamentally changed. The process that required a human touch before no longer requires the human touch.' Both Lee and Bozeman said the company believes the model it has created during difficult times, based on Lean principles, will 'translate' in a stronger market as well. Bozeman has talked frequently about a push by C.H. Robinson to get deeper into small and medium businesses. Lee said the productivity gains elsewhere in the company has allowed it 'to invest in that space, in bringing people in from a customer facing perspective.' Wednesday began with a report published by Jason Seidl of TDCowen, who had met with RXO officials in Canada. Seidl said those officials–who were not identified in the report–had made the point that the enforcement of the Department of Transportation English language requirement that will begin next week could have a significant impact on trucking capacity. Wilkerson raised that subject in his discussion at the Wells Fargo conference. 'I think it will have a big impact if it goes into effect,' Wilkerson said. But where the impact falls is not likely to be evenly distributed, he added. There will be a clear political divide on where the law could affect capacity. 'Watch the red states first, because this is something that would happen at a state level,' Wilkerson said. 'So does something happen in Texas? Does something happen in Florida? Does something happen in Tennessee, which are all highly-trafficked areas?' RXO, according to Wilkerson, believes the size of the driver capacity that would not pass the English language requirement 'could be anywhere to low double digits.' In his report, Seidl said he believed the industry is estimating that number to be between 5% and 15%. Wilkerson, in his remarks, said the continuing sluggishness of freight markets is now more of a demand issue than one of supply, because the departure of so many carriers and owner operators has tightened capacity. 'So whenever you talk about demand returning, there is not as much capacity,' he said. Given that, he said, a significant loss of more capacity because of enforcement of the English language requirement would result in a 'sharper turn in the recovery.' Westerfield said he sees 'pretty significant coordination' among government agencies like FMCSA to implement the executive order. He added that if a driver can not show proficiency in tasks like reading signs, the penalty is not a fine; it is having that driver and truck taken out of service. 'But it comes down to enforcement, which will be down at a state by state level,' Westerfield said. 'So that really speaks to regional dynamics.' Seidl's brief comment in his report was that he believed the executive order will be 'difficult to enforce.' More articles by John Kingston C.H. Robinson – and 3PL industry – win another broker liability case in 7th Circuit Leadership at C.H. Robinson celebrates 1-year milestone by posting another strong quarter RXO finds positives in quarter marked by soft market and profit loss The post Onstage in Chicago, CHRW talks tech and staffing; RXO sees language order hitting capacity appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11-06-2025
- Business
- Yahoo
RXO Q1 Earnings Call: Technology Integration and Synergy Progress Underpin Outlook Amid Freight Weakness
Freight Delivery Company RXO (NYSE:RXO) fell short of the market's revenue expectations in Q1 CY2025, but sales rose 57% year on year to $1.43 billion. Its non-GAAP loss of $0.03 per share was $0.01 below analysts' consensus estimates. Is now the time to buy RXO? Find out in our full research report (it's free). Revenue: $1.43 billion vs analyst estimates of $1.48 billion (57% year-on-year growth, 3.5% miss) Adjusted EPS: -$0.03 vs analyst estimates of -$0.02 ($0.01 miss) Adjusted EBITDA: $22 million vs analyst estimates of $22.7 million (1.5% margin, 3.1% miss) EBITDA guidance for Q2 CY2025 is $35 million at the midpoint, above analyst estimates of $34.37 million Operating Margin: -2.1%, in line with the same quarter last year Sales Volumes fell 1% year on year (11% in the same quarter last year) Market Capitalization: $2.7 billion RXO's first quarter results reflected significant progress in business integration and technology upgrades, even as external market conditions remained soft. Management attributed performance largely to the successful integration of the Coyote acquisition, which enabled carrier and coverage operations to consolidate onto a single technology platform. CEO Drew Wilkerson highlighted a 26% year-over-year increase in less-than-truckload (LTL) brokerage volumes, offset by continued softness in full truckload and automotive-related shipments. The company also reported notable productivity gains, with technology-driven improvements raising efficiency by 17% over the past year. Wilkerson described the quarter as one where 'productivity over the last 12 months increased by about 17%,' and pointed to the company's asset-light model as a key factor in managing through volatility. Looking ahead, RXO's forward guidance is shaped by ongoing integration benefits, operational flexibility, and a cautious approach to market uncertainty. Management emphasized the potential for additional cost savings as technology and procurement systems from the Coyote acquisition are fully leveraged. CFO Jamie Harris noted, 'We have significant opportunity to purchase transportation more effectively,' which could translate to meaningful margin improvements as the year progresses. While the company expects continued growth in LTL and last-mile services, executives cautioned that truckload volumes remain under pressure due to macroeconomic uncertainty and shifting customer strategies in response to trade policy changes. Management believes enhanced technology and scale position RXO for margin expansion once market conditions stabilize. Management pointed to integration synergies, LTL volume growth, and technology-driven productivity as primary factors shaping first quarter outcomes, while highlighting automotive headwinds and ongoing market softness as key challenges. Coyote integration milestone: The successful migration of both RXO and Coyote carrier and coverage operations onto one transportation management system (Freight Optimizer) allowed for better freight matching and improved scalability. Management emphasized the early realization of cross-company operational efficiencies. Raised synergy expectations: After reviewing integration progress, RXO increased its estimate for annualized cash synergies from the Coyote acquisition to more than $70 million, driven by operating expense reductions and capital expenditure savings. CFO Jamie Harris explained that these estimates exclude further potential benefits from optimizing transportation procurement and cross-selling opportunities. LTL volume strength: Less-than-truckload (LTL) brokerage volumes grew 26% year-over-year, in stark contrast to ongoing softness in the broader truckload market. Management attributed this outperformance to new customer wins and the company's ability to offer integrated solutions for complex freight needs. Last-mile segment momentum: The last-mile delivery business saw a 24% increase in stops, benefiting from existing customer growth, new customer acquisitions, and expanded service in new markets. Management described last-mile as a 'stable and growing source of EBITDA.' Automotive sector headwinds: Weakness in automotive volumes, particularly in managed transportation and expedited shipments, weighed on both revenue and gross profit. Harris quantified the impact as a $10 million year-over-year gross profit headwind, noting the higher margin typically associated with automotive-related freight. RXO's near-term outlook is shaped by integration-driven cost efficiencies, LTL and last-mile growth, and ongoing caution about freight market demand. Procurement and synergy realization: Management expects further margin improvement as unified procurement and technology systems enable more effective purchase transportation. Early wins in cost reductions are expected to ramp up as contract rate increases phase in through the year. Continued LTL and last-mile expansion: Ongoing growth in less-than-truckload brokerage and last-mile delivery is expected to help offset softness in full truckload volumes. Management highlighted cross-selling opportunities and new customer wins as drivers of segment resilience. Freight demand uncertainty: Executives remain cautious about overall freight market demand due to macroeconomic headwinds, customer responses to tariff changes, and persistent automotive sector weakness. The company's guidance incorporates a range of scenarios, with flexibility to further reduce costs if volumes deteriorate. In coming quarters, the StockStory team will monitor (1) the pace and scale of realized cost synergies from the Coyote integration, (2) ongoing growth in LTL and last-mile delivery volumes, and (3) RXO's ability to manage through continued softness in full truckload and automotive-related freight. Sustained productivity gains from technology investments and the impact of shifting trade policies will also be key signposts for future performance. RXO currently trades at a forward P/E ratio of 58.5×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
06-06-2025
- Business
- Yahoo
Analyst on X: Trucking is set up for inflationary cycle
Market analyst May Ling (@MarketswithMay) recently highlighted an intriguing trend in the trucking industry through her X (formerly Twitter) post, drawing attention to logistics as a significant component of the Producer Price Index (PPI). Her observations come at a pivotal time for the transportation sector, which has experienced dramatic fluctuations since the COVID-19 pandemic. Specifically, Ling noted that within the PPI, logistics seems to be the first sector that cut capacity in response to soft demand, rather than raising prices to make up for smaller batches. 'Most producers DID NOT reduce capacity — instead, they raised prices to coincide with smaller batch sizes (mostly in goods, but also true in some services),' Ling wrote. 'This is what was causing Inflation in many areas and should be deflationary once you get volume increases.' The PPI is a critical economic indicator that measures the average change over time in selling prices received by domestic producers for their output. Unlike the Consumer Price Index (CPI), which tracks retail prices paid by consumers, PPI captures price changes from the seller's perspective. As Ling emphasized in her tweet, 'Unlike CPI, PPI is a leading indicator for inflation,' making it particularly valuable for forecasting broader economic trends before they affect consumer U.S. truckload market has undergone significant transformation since the pandemic, characterized by extreme swings in capacity, demand and pricing. Following the COVID-19 freight boom, the industry found itself with excess capacity as demand normalized and consumer spending patterns shifted. This oversupply situation was further complicated by volatile trade policies and tariff rhetoric, creating uncertainty in import patterns. As market conditions deteriorated, thousands of small and midsize trucking carriers faced unsustainable economics. According to research from freight brokerage RXO, 'the average cost to operate a truck is 34% higher over the past decade but absolute spot rates are largely the same as they were in 2014.' This economic reality triggered widespread business failures and market exits, initiating a painful but necessary adjustment mechanism to rebalance the supply-demand equation. This newfound balance has begun manifesting in key market indicators. The national average Outbound Tender Rejection Index, which measures the percentage of tendered loads rejected by carriers, climbed to 6.67% – reaching the threshold where rejections start putting inflationary pressure on spot rates. Truckload spot rates (excluding fuel) rose 9.1% year over year in the first quarter of 2025, following an 11.6% growth rate during the fourth quarter of 2024. A notable development has been the emergence of significant regional disparities. By June 2025, tender rejection rates for truckload shipments originating in the Southeast surpassed 10% – the first time in nearly three years they had reached that level. In contrast, rejection rates for freight departing the West Coast remained well below the national average. The 'interior' markets of Atlanta, Chicago and Dallas showed the tightest capacity conditions among major freight observation that 'logistics is a major component of PPI Services' highlights the sector's importance in the broader economic landscape. Her tweet identified trucking as the first area within PPI where capacity reduction has begun, potentially signaling a shift in the inflation narrative. In her analysis, Ling pointed to a 'period of reverse economies of scale' that has persisted for almost two years. She explained that inflation has been driven by 'small batches, not shortage-driven price increases,' contrary to common misconceptions. Most producers maintained capacity but raised prices to accommodate smaller batch sizes, creating inflationary pressure across goods and some services sectors. Looking forward, Ling outlined several scenarios. One possibility involves producers eventually capitulating and cutting capacity, which could become inflationary if GDP growth follows. Alternatively, rate declines might arrive in time to drive volume growth, restoring profitability before businesses make significant capacity cuts. The market trajectory for truckload rates remains 'inflationary,' according to RXO, though trade policy presents a significant wild card. Transportation prices were forecast to be significantly higher a year from now, with industry respondents returning a reading of 75 for the pricing outlook in the Logistics Managers' Index. Ling noted that demand patterns, while showing some strange variations by industry, aren't the core issue. Instead, she pointed to 'weirdly choppy purchasing behavior that is not helpful to Trucking' and emphasized the binary impact of tariffs on the sector. Ling's analysis provides a valuable framework for understanding the relationship between logistics, the Producer Price Index and broader inflation trends. By identifying trucking as the first sector where capacity reduction has begun, she offers an early signal of potential shifts in the economic landscape. The trucking market's gradual healing has finally restored equilibrium between supply and demand, enabling carriers to regain pricing power. However, as Ling cautioned, the market remains sensitive to external shocks, particularly trade policy developments and potential economic headwinds. The significant reduction in truckload capacity has made the market more responsive even to modest demand changes, positioning the sector for potential volatility in the coming post Analyst on X: Trucking is set up for inflationary cycle appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-06-2025
- Business
- Yahoo
Truckload's path to equilibrium
The U.S. truckload market has undergone significant transformation since the COVID-19 pandemic, with the industry experiencing dramatic swings in capacity, demand and pricing. In the aftermath of the pandemic, the truckload market found itself awash in excess capacity. This oversupply stemmed from a combination of factors, including the entry of new carriers during the pandemic-era freight boom and subsequent softening of demand as consumer spending patterns normalized. The oversupply situation was further complicated by volatile trade policies, with tariff rhetoric accelerating in early 2025 and creating uncertainty in import patterns. As market conditions deteriorated, thousands of small- and midsize trucking carriers faced unsustainable economics, leading to widespread business failures and market exits. This natural, if painful, adjustment mechanism began to rebalance the supply-demand equation that had tilted heavily in shippers' favor during the post-COVID era. The exodus of carriers was driven by significant cost pressures. Publicly traded freight brokerage RXO noted in its quarterly market report that 'the average cost to operate a truck is 34% higher over the past decade but absolute spot rates are largely the same as they were in 2014.' This economic reality made it increasingly difficult for carriers to maintain profitability, particularly smaller operators without the scale or financial resources to weather prolonged market weakness. According to RXO, the truckload market 'has remained relatively calm' with spot rates continuing to step higher despite disruption from rapidly changing tariff policies. The market has followed a trend – largely in place since 2023 – of soft freight demand, reductions in carrier capacity and gradually stabilizing situation created what RXO described as 'a difficult landscape for carriers,' with many 'running with unsustainable unit economics.' This harsh operating environment accelerated the pace of carrier exits, despite 'a couple of atypical months of operating authority growth in March and April.' By mid-2025, the prolonged exodus of carriers finally brought the market closer to equilibrium. As RXO observed in its quarterly forecast, 'We're as close to equilibrium, in terms of carrier supply and shipper demand, as we've been in over two years.' The broker noted that 'relatively speaking, the capacity situation is much more fragile than at this time last year.' This newfound balance began manifesting in key market indicators. The national average Outbound Tender Rejection Index, which measures the percentage of tendered loads rejected by carriers, climbed to 6.67% by June 2025 – reaching the threshold where rejections start putting inflationary pressure on spot rates. Most enterprise shippers prefer to maintain tender acceptance percentages in the upper 90s, meaning many were already experiencing problematic service levels. The data showed significant improvement in rate trends as well. TL spot rates (excluding fuel) were up 9.1% year over year in the first quarter of 2025, following an 11.6% growth rate during the fourth quarter of 2024. Contractual rates also increased 1.4% year over year in the first quarter – the first annual increase since the end of 2022.A notable development in the recovering market has been the emergence of significant regional disparities. By June 2025, tender rejection rates for truckload shipments originating in the Southeast surpassed 10% – marking the first time in nearly three years they reached that level. In contrast, rejection rates for freight departing the West Coast remained well below the national average and were the lowest among the seven major U.S. regions. This contrast was particularly striking given the focus on imports and Southern California ports that handle the bulk of U.S. container traffic. While tender volumes out of the Southeast were down 6% year over year, West Coast volumes declined 14% annually, suggesting that demand alone wasn't driving the regional disparity. Part of the explanation lies in intermodal transportation patterns. Much of the long-haul freight demand from the West shifted to rail, with intermodal capturing a large share from the truckload sector. Loaded container volumes moving by rail out of Los Angeles remained up year over year, even as they dipped alongside declining import levels. Meanwhile, long-haul tender volumes out of Los Angeles dropped 26% annually. The Outbound Tender Rejection Index measures the percentage of truckload tenders rejected by carriers and serves as an indicator of the relative balance of supply and demand in the truckload market. (Chart: SONAR. To learn more about SONAR, click here.) By June 2025, the 'interior' markets of Atlanta, Chicago and Dallas showed the tightest capacity conditions among major freight centers. Atlanta's outbound tender rejection rate reached 8.89%, continuing an upward trend that began in late February. Chicago's rejection rate stood at 7.07%, while Dallas reported 6.86% – all above the national average. The market trajectory for truckload rates remains 'inflationary,' according to RXO, though trade policy presents a significant wild card. The 3PL classified the early part of 2025 as 'still primarily a shippers' market' but noted that 'with a continued difficult landscape for carriers, and (in many cases) decreasing 2025 contract rates setting in, it could set the stage for volatility later in 2025.' The broader trend for 2025 calls for more carrier exits and high operating costs to keep upward pressure on rates. RXO pointed to the possibility of a more material uptick in rates if trade tensions calm ahead of peak season and carrier exits become more pronounced. In that scenario, 'contract rates and routing guides set in the softer market of 2024 may not survive a tighter market late in 2025, when the spot market will likely become more lucrative than the contract market.' Transportation prices were forecast to be significantly higher a year from now, with industry respondents returning a reading of 75 for the pricing outlook in the Logistics Managers' Index. There is a growing consensus that 'the worst-case scenarios associated with potential tariffs will not come to pass,' and 2026 could reflect a more robust transportation recovery, barring a macroeconomic U.S. truckload market has traveled a difficult road since the pandemic, moving from extreme oversupply to a more balanced state through the painful but necessary process of carrier exits. This gradual market healing has finally restored equilibrium between supply and demand, enabling carriers to regain pricing power as evidenced by rising tender rejection rates and strengthening spot market conditions. The market remains sensitive to external shocks, particularly trade policy developments and potential economic headwinds. However, the significant reduction in truckload capacity over the past year has made the market more responsive to even modest demand changes. As one analyst noted, 'a significant reduction in truckload capacity over the past year has made the market more vulnerable. Even with a somewhat bearish outlook for demand, the truckload sector appears increasingly reactive — and poised for volatility.' The post Truckload's path to equilibrium appeared first on FreightWaves. Sign in to access your portfolio
