What Happened?

Shares of freight delivery company XPO (NYSE:XPO) jumped 15.3% in the morning session after the company reported third-quarter earnings that exceeded analysts' revenue expectations. Gross margin improved significantly, making for a comfortable beat on EPS and EBITDA. Despite the solid results, management noted a "soft freight environment." Regardless, it was still a strong quarter for the company.

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What The Market Is Telling Us

XPO’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for XPO and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was about 2 months ago when the stock dropped 12.1% on the news that the company provided underwhelming preliminary Less-Than-Truckload (LTL) operating metrics for August 2024. Amidst a soft demand environment, LTL tonnage per day decreased by 4.6% year on year. This decline was driven by a 4.5% decrease in shipments per day (fewer individual shipments) and a slight decrease in weight per shipment. 

Chief Executive Officer, Mario Harik added, "In August, we managed our variable costs effectively in a soft demand environment, supporting our outlook for margin expansion. The industry pricing backdrop remains constructive, and we're executing our company-specific initiatives to deliver strong above-market yield growth. Our ongoing service improvements and network investments will further accelerate our results when industry demand rebounds."

XPO is up 59.4% since the beginning of the year, and at $135.33 per share, has set a new 52-week high. Investors who bought $1,000 worth of XPO’s shares 5 years ago would now be looking at an investment worth $1,709.

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