If anyone following or interested in XPO hasn’t read the Q2 conference call transcript yet, I very highly recommend it. It’s excellent:


I sold all my SWIR today – I think management there is struggling with its transition and the business is flailing (I’m not sure how many times I need to repeat the mistake of buying companies in transition that look cheap, but knowing me it probably won’t be the last time!) – and moved a big chunk of it to XPO. I might build that out even further over the coming weeks.

I know that’s kind of an anti-Saul move, going from a profitable company to a “story” company, but XPO has been backing up its story with solid numbers for a while now, it has an excellent management team with a long, proven track record, it has continued to surpass the milestones the company has set for itself, and it has a long runway ahead of it with a clear path to growth that management can intelligently articulate. I don’t think it’ll be merely a “story” company for too much longer now that it’s beginning to gain critical mass.

All just my opinion, of course!

Long XPO



I’ve read through and taken notes on XPO earnings call. I want to invest in XPO based upon the reputation of the CEO and their current growth rate in terms of revenue and EBITDA.

What I am having trouble reconciling is the following. I don’t have any idea how to value XPO. They don’t talk about EPS much.

I’m looking for some help valuing the business.


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I started reading the cc transcript. I don’t not know anything about the company before. As a logistics company, how does it compare with someone like UPS or Fedex?



A better comparison for XPO would be CH Robinson I believe. XPO may own some trucks, but the vast majority of their services are brokered. They have the intellect, software and business relationships to get a product from point A to B throughout many places in the world.

However, they don’t have fleets such as UPS and FedEx.

Hope that helps and I’m open to correction.


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Neil I own both XPO and SWIR. I am curious why do you think management at SWIR is struggling with its transition?

My first reaction is to disagree with you. However after consideration I am wondering if I am missing something?

The are increasing revenues and earnings while transitioning to providing cloud and connectivity based services. That is they are buying existing businesses while not taking on debt and creating new services for existing customers while gaining new customers.

Non GAAP Quarterly revenue was up 17%, EBITDA up 93%, Earnings from Operations up 193%. Earnings per share of $0.26. Q3 estimates from SWIR expected to be between 0.23-0.27. This is why the supposed sell off today.

I have read every post on TMF boards, every analysts review, listened to the webcast and am turning over ever stone. I really want to understand how SWIR is struggling?


Thanks A.J.

But I wonder what is the so-called last-mile business. Also they have contract with an ecommerce business.


I don’t have any idea how to value XPO. They don’t talk about EPS much.

Great question, A.J. They do talk about earnings a lot, but in terms of EBITDA rather than EPS.

I personally don’t like to get into the weeds with valuation, as I think there are just way too many assumptions that go into it: my inclination is more towards trying to be “generally right” rather than “precisely wrong.” If you really wanted to build a model, I think you could probably estimate free cash flow from the 2019 EBITDA and revenue figures, along with the other assumptions presented in the conference call like additional debt, capex, etc. (there were a lot of questions about the company’s internal model from analysts, as you might imagine), and then discount those cash flows based on your confidence in management’s estimates and your own investment goals.

But here’s a much simpler back-of-the-envelope way to look at it: XPO just bought out Norbert Dentressangle for about 9 times 2015 EBITDA, which I’ve seen a TMF analyst call a “reasonable” price. So if you were to assume the market will value XPO at that level, that would give a market cap of 9 x $1.5B = $13.5B in 4 years if you believe management’s EBITDA estimate. The market cap today is just over $4B, so that’d translate into about 35% annualized appreciation in share price if management hits its targets and the number of fully diluted shares remained constant (they obviously won’t). So apply a discount you believe is reasonable to account for additional shares and your degree of confidence in management’s estimates.

I’ve also seen a TMF analyst roughly estimate that the company, if it were valued in line with peers, might have a market cap of about 0.8 * revenues (and indeed, that’s about what CH Robinson is priced at today). Using that rule of thumb with management’s goal of $23B of revenue in 2019, one would arrive at a market cap of around $18B. That makes me think there’s some margin of safety in the above estimate of $13.5B.

So my own personal conclusion is that today’s price is reasonable if the company can come close to achieving its goals.

I have no idea, of course, if any of this will play out, or where the company will be in 4 years, or how the market will value it, or how many additional shares outstanding there will be. But there is significant insider ownership (Jacobs owns 20% of shares), and I believe there are also bonuses based on EPS and share price targets, so it seems like management’s interests should be well aligned with ours.

That’s how I’m looking at it, anyway.



why do you think management at SWIR is struggling with its transition… after consideration I am wondering if I am missing something?

Hi Retirementdough, it’s probably me that’s missing something, but the company seems to be putting a lot of energy and capital into its enterprise business (which is supposed to be much higher margin), including multiple acquisitions, and that business seems to be going nowhere. That’s what I meant when I said struggling with their transition. I also think all those acquisitions taint the adjusted EPS somewhat, as “one-time” expenses are removed but those expenses seem to be happening on a regular basis.

I obviously hope SWIR does great for everyone who is invested, but it’s not a company I wish to own at this time.



I have read every post on TMF boards, every analysts review, listened to the webcast and am turning over ever stone. I really want to understand how SWIR is struggling</>

In my mind, they’re struggling because the business they want to grow isn’t growing. I get that they are making acquisitions in that space to help bolster their presence but they don’t appear to be executing well right now regardless.

I have som SWIR currently but I won’t buy anymore until the company starts performing well in the enterprise segment again.




Just wanted to say thanks for insight regarding valuing XPO based on EBITDA and revenue multiples for similar companies. That certainly helps put things in perspective.



Thanks nevercontent that was very informative and clever way to look at the company

Will XPO be the next MIDD?
Middleby has had a super run in consolidating a very fragmented industry. Modern communications ,computers , and software would seem to give XPO advantages over smaller companies. And except for short term impact of recessions ,their business plan should be good way into the future.


Will XPO be the next MIDD?
Or Blockbuster (before Netflix), or Waste Management or United Rentals, etc. That is the great consolidation hope and part of my investing thesis. Others like Home Depot grow by crushing the competition instead of buying them.

For anyone who doesn’t own XPO already but wants to, folks trading on technicals only are creating a sell-off and the price is far more attractive:


I own already, and am down in the -10%+ range right now, but I believe the story will pay off – probably a 2-yr wait, but that’s ok. Might buy some more…

For anyone who doesn’t own XPO already but wants to, folks trading on technicals only are creating a sell-off and the price is far more attractive:

And “more attractive” every day. No need to rush :wink:
It smashed through the 200dma on high volume and has not stopped, so that is a bad sign for now. Still wait a bit, the market it in “correction mode”, no one feels like buying.

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Just curious if you’re still holding XPO. The shares outstanding are what creep me out. I had a big position, but sold it last week because I got nervous, and also I wanted to raise money (since everything is on sale lately).

If you’ve sold, what was your thinking?


Hi Bear,

Just curious if you’re still holding XPO… If you’ve sold, what was your thinking?

No, I sold after I had some time to think about their acquisition of Con-way. That seemed like a big departure from their asset-light strategy (which they’d already departed from somewhat through their acquisition of Norbert Dentressangle, but at least that played into global expansion).

It’s not so much that I see a move away from asset-light as a negative thing (there are advantages and disadvantages), but more that it seems like a big transition to me, and I increasingly see big transitions as times of heightened risk for a business. When the business model suddenly changes, I want to see proof that management is able to execute successfully with the new model. It’s the same reason I’m not interested in Chipotle right now: even though I firmly believe the food-borne illness problems will blow over with time, I’m much less certain about management’s ability to succeed with a new approach to the business that is arising as part of their response to the illness.

To be clear, I’m not predicting negative outcomes: I just see these transitions as a shift to a different business than the one I originally invested in, and I want to see evidence that the new business performs as well (or better) before investing anew in it.

Lastly, regarding XPO again, it’s not profitable yet. And I think sticking with profitable companies that are growing well is a very important lesson of Saul’s. And in this market especially, there’s no shortage of those companies selling at cheap prices.



Makes sense. Thanks.