• If you have been wondering whether GXO Logistics at around US$53 per share still offers value, the next sections will break down what the current price might be implying.
• The stock has delivered a 46.2% return over the last year, alongside a 2.6% gain in the past week, but this follows a 12.9% decline over the last 30 days and a 2.2% decline year to date.
• Recent coverage has focused on GXO Logistics as a pure play logistics operator, with investors assessing how contract wins, customer trends and sector sentiment relate to the current share price. This combination of attention on the business model and the share price path helps explain why some investors are reassessing what they are willing to pay for the stock.
• GXO Logistics currently has a valuation score of 5 out of 6. The rest of this article will walk through the key valuation methods behind that figure and will also hint at a broader way to think about value that ties everything together at the end.

GXO Logistics delivered 46.2% returns over the last year. See how this stacks up to the rest of the Logistics industry.

Approach 1: GXO Logistics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model looks at the cash GXO Logistics is expected to generate in the future, then discounts those projections back to a single value in today’s dollars to estimate what the business might be worth per share.

For GXO Logistics, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flows in $. The latest twelve month free cash flow is about $70.2 million. Analyst estimates and Simply Wall St extrapolations project free cash flow reaching $617.8 million in 2035, with interim years such as 2026 and 2027 at $375.0 million and $415.8 million respectively.

After discounting these projected cash flows, the DCF model arrives at an estimated intrinsic value of US$62.87 per share. Compared to a current share price of around US$53, this suggests the stock is about 15.6% undervalued according to this method.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests GXO Logistics is undervalued by 15.6%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for GXO Logistics.

Approach 2: GXO Logistics Price vs Sales

For companies where revenue is a key driver and earnings can be influenced by accounting items, the P/S ratio is often a useful way to think about value. Investors typically pay a higher or lower P/S depending on what they expect for future revenue growth and how risky they think those cash flows might be.

GXO Logistics currently trades on a P/S of 0.46x. This sits below both the Logistics industry average P/S of 0.87x and the peer group average of 1.56x. This suggests the market is applying a lower revenue multiple to GXO Logistics than to many of its listed peers.

Simply Wall St’s Fair Ratio for GXO Logistics is 0.88x. This is a proprietary estimate of what the P/S might be given factors such as the company’s growth profile, industry, profit margins, market cap and key risks. Because it is tailored to the company, this Fair Ratio can be more informative than a simple comparison with industry or peer averages, which do not adjust for these differences.

Comparing the Fair Ratio of 0.88x with the current P/S of 0.46x indicates that GXO Logistics may be undervalued on a sales basis.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your GXO Logistics Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St’s Community page let you attach your own story about GXO Logistics to the numbers by linking your view of its contracts, automation plans and sector risks to explicit forecasts for revenue, earnings, margins and a fair value. You can then compare that fair value with the current share price to decide if it looks appealing or stretched, with the narrative updating automatically as new news or earnings arrive. For example, one bullish GXO view currently ties a fair value of about US$85.09 to assumptions of earnings reaching US$350.1m by 2029 on a 37.0x P/E. A more cautious view anchors on a fair value near US$58.04 with earnings of US$173.8m by 2028 on a 33.2x P/E. Your job as an investor is simply to decide which story feels closer to how you see the company.

Do you think there's more to the story for GXO Logistics? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.