It's been a rough year for XPO Logistics (XPO 1.89%).

Earlier in the decade, the stock had become an under-the-radar market darling, rising more than 3,000% from its depths following the financial crisis. Over the last year, however, the stock has given up nearly 40% amid concerns about slowing growth, a surprise guidance cut, the loss of significant business from its biggest customer -- widely believed to be Amazon (AMZN 0.22%) -- and even an attack from a short-seller.

An XPO truck on the highway.

Image source: XPO Logistics.

Given those factors and the company's slowing revenue growth, illustrated in the chart below, it's easy to see why investor concerns have mounted and the stock has tumbled recently.

XPO Chart

XPO data by YCharts.

XPO has backed off from its traditional "roll-up" strategy, a method of growing quickly through acquisitions. In XPO's case, it took over trucking and freight companies like Con-Way and Norbert Dentressangle, which rapidly expanded the company's reach and drove huge growth in the stock. Those moves have made the company No. 2 in the world in contract logistics and freight brokerage and the leader in heavy-goods delivery.

However, with the stock's recent slide, CEO Brad Jacobs has suspended the company's acquisition strategy and is instead devoting its resources to buying back the company's stock. Over the last year, XPO has slashed its share count by 24% to 102 million, spending $1.4 billion in the first half of this year to repurchase shares. With just $197 million in net income over the last two quarters, the company is funding those buybacks through debt, but the move is a sign that management is convinced that its stock is deeply undervalued at the moment.

Show me the growth

After XPO's revenue fell 2.8% in the second quarter, investors might have given up thinking that XPO is still a growth stock. However, the company has a number of promising initiatives in the pipeline that should emerge as key growth drivers over the coming years.

XPO Direct may have the biggest impact of all of them. The program launched just last year and combines a number of XPO's unique assets and capabilities, including its warehouses, last-mile hubs, and delivery fleet, to meet a need that e-commerce shippers and others are increasingly demanding. According to the company, XPO Direct is on target to reach $1 billion in revenue by 2022, and the program currently has $200 million worth of orders booked.

With Direct, XPO can reach 95% of the U.S. population in two days, as the company now operates more than 90 distribution facilities in North America. Last year, it completed 14 million last-mile deliveries of heavy goods like furniture and appliances.

The solution provides a scalable warehousing and shipping network to online and offline retailers to help them better compete with giants like Amazon and meet customer expectations for quick delivery and easy returns. Direct combines a number of services that customers traditionally had to put together themselves.

XPO's data also helps its customers make smarter decisions like planning for peak capacity and deciding where to locate new warehouses. By the end of last year, 90 of the company's top 100 customers were using two or more of its services, and 55 of the top 100 were using five or more, up from close to zero in 2015. That shows that the company's ability to package disparate assets and services in one place for its customers can be a competitive advantage.

An expanding piece of the pie

In some ways, XPO looks like a sprawling company with a number of different businesses, some more interconnected than others. For instance, as the company explained in its recent earnings call, revenue from its postal injection business, which is taking truckloads of packages to the post office, declined 21% in the second quarter as its largest customer, again believed to be Amazon, took its business in-house. XPO has also seen that customer pull other business away from it.

However, the prospects of businesses like XPO Direct should eventually help the company return to consistent growth. Though investors tend to perceive the company as an e-commerce stock, the majority of the business is still in more traditional logistics services. Its last-mile segment, for example, made up just 6% of revenue last year. In 2018, the share of its revenue derived from e-commerce- and retail-related business was 31%, and it is growing as a share of its overall business.

E-commerce sales in the U.S. continue to grow by double digits, and that long-term trend should provide a tailwind for XPO as more of the company's business focuses on e-commerce. In addition to XPO Direct, the company also launched XPO Connect last year, a real-time digital freight marketplace that helps shippers save on costs and secure the fastest shipping options available.

XPO's recent revenue guidance cut shows that those headwinds will likely remain over the near term, but looking out over the next few years, initiatives like XPO Direct and Connect should help the company capture a greater percentage of the fast-growing e-commerce market. Meanwhile, the aggressive share buybacks should help juice earnings per share when profits begin to rise once again.