XPO Logistics (NYSE:XPO) focuses on logistics, but its approach differs from those that many of its peers use. Rather than accentuating one or two key modes of transportation, XPO puts together a much broader range of ways to get things from here to there that opens up markets that other logistics companies can't serve effectively. Coming into Tuesday's fourth-quarter financial report, XPO investors were hoping that the logistics specialist would be able to reverse year-ago losses and enjoy solid revenue growth. XPO's results were even better than many had expected, building some momentum coming into 2017.

Let's take a closer look at XPO Logistics to see how it did and whether it can keep moving forward.

XPO Logistics reaches record heights

XPO Logistics' fourth-quarter results closed a strong year for the company. Revenue was up 10% to $3.68 billion, which was slightly faster than most investors had expected to see from XPO. Even better, net income of $27.3 million was a record result for a fourth-quarter performance, and even after making one-time adjustments, adjusted earnings of $0.24 per share were $0.03 better than the consensus forecast and a dramatic improvement over the loss the company posted in the fourth quarter of 2015.

Semi-tractor trailer rig with XPO logo

Image source: XPO Logistics.

Taking a closer look at the numbers, XPO Logistics enjoyed good performance from both of its main businesses. The transportation segment saw revenue grow by 11% from year-ago levels. The acquisition of Con-way played a slight role, as the previous year's fourth quarter included only two months' worth of Con-way results, but XPO said that organic growth in North America and Europe played a key role, especially given the divestiture of XPO's full truckload unit in North America in October 2016. Rising e-commerce helped send last-mile business higher, and improving operating margin helped produce a 40% rise in pre-tax operating earnings and a solid bottom-line gain.

XPO's logistics business saw only slightly slower growth of 9% in sales. Adverse foreign exchange rates held back growth in the European region, but XPO reported good organic growth both there and in North America. New contracts with e-commerce and cold-chain customers helped the company in Europe, and strength in aerospace and the food and beverage industry helped to offset weaker demand from the automotive sector. Operating income for the unit was up by nearly half from year-ago levels.

CEO Brad Jacobs celebrated the company's performance. "I'm pleased that we delivered record fourth-quarter results for net income, cash flow from operations, adjusted EBITDA, and free cash flow," Jacobs said. The CEO also pointed to last-mile, contract logistics, and less-than-truckload operations in contributing to XPO's overall strength.

Can XPO fly higher?

2017 looks even better in the eyes of XPO Logistics. In Jacobs' words, "We'll get the full 12-month benefit of numerous efficiencies we implemented throughout 2016 in procurement, real estate, back office operations, and workplace technologies." Marketing efforts should also help bolster XPO's business prospects, driving further growth.

Still, XPO has a high hurdle to overcome this year. Investors don't expect to see much top-line growth as the acquisitions that XPO made are now more than a year old, and so any revenue gains will have to come organically. Yet those following XPO believe that it can nearly double its adjusted earnings in 2017 from 2016 levels. With financial targets of adjusted pre-tax operating income of $1.35 billion this year and $1.575 billion in 2018, XPO Logistics is pushing hard to try to satisfy those optimistic expectations among its shareholders.

XPO investors responded favorably to the report, and the stock climbed nearly 4% in after-hours trading on Tuesday afternoon following the announcement. If it can keep taking advantage of favorable conditions and using its competitive advantages effectively, then XPO Logistics could be just beginning to see the improvement in its fundamental business results.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends XPO Logistics. The Motley Fool has a disclosure policy.