RXO, Inc. (RXO) AI Stock Analysis

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RXO, Inc.

(NYSE:RXO)

47Neutral

RXO's overall stock score reflects significant financial and operational challenges. Declining revenues, increased leverage, and bearish technical indicators weigh heavily on the score. While successful integration and growth in complementary services offer some positives, market conditions and high costs pose ongoing risks.

Positive Factors

Financial Performance

Adjusted EBITDA was $42m, up 35.5% year-over-year and above the estimate.

Management Strategy

Management emphasized idiosyncratic levers to drive earnings higher from here regardless of the cycle.

Synergy Opportunities

RXO is viewed as a leading tech-enabled Truck Brokerage provider in North America with synergy opportunities via the integration of its acquisition of Coyote.

Negative Factors

Earnings Decline

Concerns stem from the speed and magnitude of decline in Legacy RXO/Coyote earnings and prolonged freight market weakness.

Guidance and Expectations

Q1 guidance calls for brokerage volume declines of mid-to-high-single digits despite more than doubling brokerage biz with Coyote acquisition.

Market Conditions

Considering increased economic uncertainty on top of an already soft trucking environment, analyst is incrementally cautious on RXO's volume trajectory.

RXO, Inc. (RXO) vs. S&P 500 (SPY)

Market Cap

$2.06B

Dividend YieldN/A

Average Volume (3M)1.57M

Price to Earnings (P/E)―

Beta (1Y)1.27

Revenue Growth15.86%

EPS Growth-6302.63%

CountryUS

Employees7,540

SectorIndustrials

Sector Strength66

IndustryTrucking

Share Statistics

EPS (TTM)-2.12

Shares Outstanding163,910,690

10 Day Avg. Volume1,926,116

30 Day Avg. Volume1,569,304

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.67

Price to Cash Flow (P/CF)-108.40

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$20.46

Price Target Upside54.53% Upside

Rating ConsensusHold

Number of Analyst Covering15

RXO, Inc. Business Overview & Revenue Model

Company DescriptionRXO, Inc. (RXO) is a leading provider of transportation and logistics services, operating primarily in the freight brokerage sector. The company specializes in facilitating the movement of goods by connecting shippers with carriers, leveraging innovative technology solutions to optimize supply chain efficiency. RXO's comprehensive suite of services includes truckload, less-than-truckload, intermodal, and last-mile delivery, serving a diverse range of industries and customers across North America.

How the Company Makes MoneyRXO, Inc. generates revenue primarily through its freight brokerage operations, where it earns fees by matching shippers with suitable carriers for transporting goods. The company leverages its extensive network of carrier partners and advanced technology platform to provide cost-effective and efficient logistics solutions. Key revenue streams include service fees charged to shippers for arranging transportation and ancillary services. Additionally, RXO may benefit from significant partnerships with large shippers and carriers, which can lead to increased volume and preferential rates, further enhancing its earnings potential.

RXO, Inc. Financial Statement Overview

Summary

RXO, Inc.'s financial performance in 2024 was challenging, characterized by declining revenues, profitability, increased leverage, and weaker cash flows. Despite a strong equity position, high debt levels and poor cash flow generation pose significant risks.

Income Statement

Neutral

RXO, Inc. faced a challenging financial year with significant declines in revenue and profitability. Revenue dropped notably from 2023 to 2024, and the company reported a negative net income in 2024, reflecting a net loss margin. The gross profit margin was weaker compared to previous years, and both EBIT and EBITDA margins turned negative, indicating operational struggles.

Balance Sheet

Neutral

The balance sheet reveals a strong equity position with a high equity ratio, indicating financial stability. However, the debt-to-equity ratio increased, suggesting a rise in leverage, which could pose risks if not managed carefully. The overall asset base grew slightly, but the increase in debt is a concern.

Cash Flow

Negative

The cash flow statement shows a concerning decline in cash generation. Operating cash flow turned negative in 2024, and free cash flow also declined significantly, reflecting pressure on liquidity. The free cash flow to net income ratio is unfavorable due to negative earnings, indicating cash flow issues.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
4.55B	3.93B	4.80B	4.69B	3.36B
	Gross Profit
696.00M	658.00M	1.17B	1.01B	789.00M
	EBIT
-56.00M	39.00M	123.00M	192.00M	80.00M
	EBITDA
-187.00M	103.00M	209.00M	277.00M	160.00M
	Net Income Common Stockholders
-285.00K	4.00M	92.00M	150.00M	43.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
35.00M	5.00M	98.00M	29.00M	70.00M
	Total Assets
3.41B	1.82B	2.04B	2.07B	1.87B
	Total Debt
664.00M	558.00M	617.00M	135.00M	116.00M
	Net Debt
629.00M	553.00M	519.00M	106.00M	46.00M
	Total Liabilities
1.80B	1.23B	1.45B	998.00M	802.00M
	Stockholders Equity
1.61B	594.00M	589.00M	1.07B	1.07B
Cash Flow		Free Cash Flow
-57.00M	25.00M	253.00M	116.00M	-22.00M
	Operating Cash Flow
-12.00M	89.00M	310.00M	155.00M	25.00M
	Investing Cash Flow
-1.06B	-66.00M	-56.00M	-38.00M	-39.00M
	Financing Cash Flow
1.11B	-117.00M	-183.00M	-158.00M	32.00M

RXO, Inc. Technical Analysis

Technical Analysis Sentiment

Negative

Last Price13.24

Price Trends

50DMA

18.32

Negative

100DMA

22.27

Negative

200DMA

25.29

Negative

Market Momentum

MACD

-1.76

Positive

RSI

29.73

Positive

STOCH

19.31

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RXO, the sentiment is Negative. The current price of 13.24 is below the 20-day moving average (MA) of 15.97, below the 50-day MA of 18.32, and below the 200-day MA of 25.29, indicating a bearish trend. The MACD of -1.76 indicates Positive momentum. The RSI at 29.73 is Positive, neither overbought nor oversold. The STOCH value of 19.31 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RXO.

RXO, Inc. Risk Analysis

RXO, Inc. disclosed 39 risk factors in its most recent earnings report. RXO, Inc. reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

RXO, Inc. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	62 Neutral	$4.13B	11.17	5.46%	215.76%	4.12%	-8.54%
ARCB	61 Neutral	$1.37B	8.16	13.56%	0.79%	-5.61%	40.21%
SNDR	57 Neutral	$3.94B	33.84	3.94%	1.69%	-3.79%	-50.29%
MRTN	57 Neutral	$1.08B	50.71	2.83%	1.81%	-13.47%	-62.49%
WERN	55 Neutral	$1.74B	51.44	2.29%	1.98%	-7.71%	-69.05%
RXO	47 Neutral	$2.06B	―	-25.84%	―	15.86%	-6302.63%
HTLD	46 Neutral	$647.87M	―	-3.52%	0.97%	-13.25%	-301.55%

* Industrials Sector Average

Performance Comparison

RXO

RXO, Inc.

12.78

-7.13

-35.81%

HTLD

Heartland Express

8.25

-2.10

-20.29%

MRTN

Marten Transport

13.30

-3.18

-19.30%

WERN

Werner Enterprises

28.10

-7.00

-19.94%

ARCB

ArcBest

61.38

-83.91

-57.75%

SNDR

Schneider National

22.02

1.19

5.71%

RXO, Inc. Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -47.59% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant achievements in integration and growth within complementary services, which are offset by challenges in the freight market and declines in brokerage volume. Despite a strong liquidity position and optimistic future outlook, the current market softness and costs associated with integration pose challenges.

Highlights

Coyote Logistics Integration Ahead of Schedule

The integration of Coyote Logistics is ahead of schedule, with expected annualized cost synergies increased to at least $50 million, double the initial estimate.

Strong Performance in Complementary Services

Managed transportation sales pipeline is nearly $2 billion, up almost 50% from last quarter, and last mile stops grew by 15% year over year.

Record Brokerage Volume Growth

Brokerage volume increased by 10% sequentially from the third quarter, despite a year-over-year decline, indicating strong quarter-over-quarter growth.

Improved Liquidity Position

The liquidity position is the strongest in the company's history, with a $600 million undrawn revolver and quarter-end gross leverage at 1.7 times trailing twelve months pro forma adjusted EBITDA.

Lowlights

Soft Freight Market Conditions

The freight market remains soft with a muted peak season, impacting buy rates and gross profit per load.

Decline in Brokerage Volume

Combined brokerage volume declined by 6% year over year, with a specific 8% decline in full truckload volume.

Lower Managed Transportation Revenue

Managed transportation revenue declined by 8% year over year, primarily due to lower automotive volume in the managed expedite business.

High Transaction and Integration Costs

Transaction, integration, and restructuring expenses are expected between $40 million and $50 million for the year, impacting cash flows.

Company Guidance

During the RXO Fourth Quarter 2024 Earnings Conference Call, the company provided key guidance metrics, highlighting their successful integration of Coyote Logistics, which remains ahead of schedule and has led to an increased estimate for call synergies of at least $50 million. The company reported a fourth-quarter adjusted EBITDA of $42 million, falling within their guidance range, with brokerage volume declining 6% year-over-year but increasing 10% sequentially. RXO's managed transportation sales pipeline nearly reached $2 billion, growing 50% from the previous quarter, while last mile stops grew 15% year-over-year. For the first quarter of 2025, the company expects adjusted EBITDA between $20 million and $30 million, with tightening market conditions impacting buy rates. RXO anticipates brokerage volume to decline by mid to high single digits year-over-year but expects full-year growth. They also project capital expenditures between $75 million and $85 million for 2025, with significant structural improvements expected to enhance earnings power and free cash flow across market cycles.

RXO, Inc. Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures

RXO, Inc. Reports Q4 2024 Financial Results

Neutral

Feb 5, 2025

On February 5, 2025, RXO reported its financial results for the fourth quarter of 2024, highlighting a successful integration of Coyote Logistics and increased synergies. Despite a GAAP net loss of $20 million, the company achieved a 10% sequential growth in brokerage volume and a 15% year-over-year growth in last mile stops, with revenue reaching $1.7 billion. The company remains optimistic about its strategic investments and increased scale, positioning itself well for future growth despite a soft freight market.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.