XPO Up Big After Earnings Beat

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XPO (NYSE: XPO) delivered a beat on both earnings and revenue this morning, but the stock's strong 11.6% rally tells you something important: investors are watching execution and they like what they see.

Here's What Happened

XPO reported Q3 adjusted diluted EPS of $1.07, beating the $1.02 consensus by $0.05. Revenue came in at $2.11 billion, topping the $2.07 billion estimate. The stock opened at $124.02 and is trading up 11.6% by mid-morning, a strong move that reflects investor conviction in XPO’s operational momentum despite a cautious freight backdrop.

North American LTL Drives the Upside

The North American LTL segment generated $1.26 billion in revenue, propelled by yield improvements and AI-driven productivity gains. Management emphasized that record service quality and margin expansion are taking hold even as the freight market remains soft. Adjusted EBITDA rose 2.7% year-over-year to $342 million, a solid result when you consider the headwinds.

CEO Mario Harik said the company is "in the early innings of realizing our long-term margin opportunity" and expects performance to accelerate as the strategy gains traction. That's cautiously optimistic language, but it's grounded in visible operational progress.

The Profit Decline You Need to Watch

Operating income fell 6.82% year-over-year to $164 million. Net income dropped 13.68% to $82 million. A $35 million charge for environmental and product liability claims weighed on results, but even adjusting for that, the bottom-line pressure reflects the freight cycle's reality. Cash and equivalents declined 11.38% to $335 million, a decline worth monitoring as the company manages capital allocation.

The company repurchased $50 million in stock and repaid $50 million on its term loan during the quarter, showing balanced capital discipline.

Numbers Tell the Story

Key Figures

Adjusted EPS: $1.07 (vs. $1.02 expected); up year-over-year Revenue: $2.11B (vs. $2.07B expected); up 2.83% YoY Adjusted EBITDA: $342M; up 2.7% YoY Operating Income: $164M; down 6.82% YoY Net Income: $82M; down 13.68% YoY Operating Cash Flow: $371M Free Cash Flow: $175M

The margin expansion at LTL is the real story here. That's where you should focus if you're tracking execution.

What Management Said

Harik kept the focus on operational discipline. He noted that the company "continued to exceed expectations in the third quarter" despite the soft freight environment. The tone was measured but confident, emphasizing that margin gains are real and that strategy is working even as the cycle remains challenged.

Story Continues

What Comes Next

Watch whether XPO can sustain margin expansion as freight demand stabilizes. The stock’s sharp double-digit rally suggests investors are rewarding execution and margin control. Analyst consensus targets $141.68 which the stock price is approaching after today's sharp price increase.

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