As the U.S. railroads and labor unions are on the table to resolve their issues and possibly avert a strike, we dig into some companies that provide alternative modes of transportation. In this article, we will look at the three prominent logistics companies in the United States — United Parcel Service, Inc. (NYSE:UPS), XPO Logistics, Inc. (NYSE:XPO), and GXO Logistics, Inc. (NYSE:GXO).
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It is worth noting that the White House is closely monitoring the deadlock between railroads and labor unions. In a press briefing on Tuesday, the White House Press Secretary, Karine Jean-Pierre, said the situation could turn out to be a grave problem for “American families, businesses and communities” if the railroads and labor unions fail to strike a deal.
Karine added that the White House is “working with other modes of transportation, including the shippers, truckers, and air freight, to see how they can step in and keep goods moving in case of this rail shutdown.”
Noteworthy is that President Joe Biden approved the formation of the Presidential Emergency Board in July to resolve the problems between unions and railroads in the United States. Amid this scenario, prospective investors might be intrigued to know more about United Parcel, XPO Logistics, and GXO Logistics.
A consolidated chart of these logistics companies, designed using TipRanks’ Stock Comparison tool, is given below.
United Parcel Service, Inc. (NYSE:UPS)
This Georgia-based company provides contract logistics, transportation, and delivery services in the United States and internationally. Also, the company has expertise in providing ocean freight, air freight, customs brokerage, and other services. Its market capitalization is $167.63 billion.
The company’s CEO, Carol Tome, said, “While the external environment is ever changing, our better not bigger strategic framework has fundamentally improved nearly every aspect of our business, enabling greater agility and strong financial performance.”
For 2022, United Parcel forecasts revenues to be $102 billion and an adjusted operating margin of 13.7%. These projections are higher than $97.3 billion in revenues and an adjusted operating margin of 13.5% in 2021.
What Is the Forecast for UPS Stock?
UPS’ average price forecast is $207.79, representing 7.83% upside potential from the current level. The highest price target is $227, and the lowest is $167. On TipRanks, the company has a Moderate Buy consensus rating based on seven Buys, seven Holds, and one Sell.
Financial bloggers are 90% Bullish on UPS stock versus the sector average of 66%. Also, hedge funds are positive about the stock and have purchased 60.3 thousand UPS shares in the last quarter.
XPO Logistics, Inc. (NYSE:XPO)
The $6-billion company provides freight transportation services, including less-than-truckload (LTL), last-mile logistics, and brokerage. Based in Connecticut, the company operates in transportation and logistics, retail, consumer goods, e-commerce, and other industries. The company is expected to spin off its LTL and brokerage businesses in the fourth quarter of 2022.
XPO Logistics’ Chairman and CEO, Brad Jacobs, said, “Our North American less-than-truckload network and our tech-enabled brokered transportation platform have tremendous momentum heading into the spin-off, when we expect to separate these businesses into independent companies.”
For 2022, the company anticipates adjusted earnings to be within the $5.55-$5.90 per share range. This projection is above $5.20-$5.60 per share stated earlier.
Is XPO a Good Stock to Buy?
With solid prospects heading into the spin-off, the stock appears to be an attractive investment option for prospective investors.
Analysts are unanimously optimistic, with 14 Buys, about the prospects of XPO Logistics. XPO’s average price target is $78.54, mirroring upside potential of 50.63% from the current level.
Further, both bloggers and hedge funds share similar sentiments about the stock. While financial bloggers are 87% Bullish on XPO (versus the sector average of 66%), hedge funds have increased their exposure to the stock by purchasing 40.3 thousand shares in the last quarter.
GXO Logistics, Inc. (NYSE:GXO)
The $5.36-billion company provides logistics services in the United States and internationally. The Connecticut-based company has customers in food and beverage, retail, industrial, and other various industries.
The company’s CEO, Malcolm Wilson, said, “We continue to benefit from durable tailwinds, and the demand for our cuttingedge automated solutions is only growing stronger as customers increasingly look to GXO to help navigate supply chain complexity, elevated inventory levels, and high inflation.”
For 2022, the company forecasts organic sales to grow 12%-16% year-over-year, compared with the 11%-15% expected earlier. Adjusted earnings are forecast to be within the $2.70-$2.90 per share range.
Is GXO Stock a Buy?
With solid prospects and the ability to withstand near-term hurdles, the company could be an attractive investment option for prospective investors.
GXO has a Strong Buy consensus rating based on nine Buys and two Holds. GXO’s average price target of $67.64 reflects upside potential of 49.55% from the current level.
It is worth mentioning that financial bloggers are 100% Bullish on GXO versus the sector average of 66%. On the contrary, hedge funds have lowered their stake in GXO by selling 242.7 thousand shares in the last quarter.
Concluding Remarks
As the government, railroads, and labor unions try to resolve the looming threat of a strike, companies like UPS, XPO, and GXO, which provide alternative sources of logistics services, seem to be some of the immediate beneficiaries of the situation.
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