GXO Logistics (GXO 3.88%) is the world's biggest pure-play contract logistics company.
The company was spun off from XPO in 2021 and has made several acquisitions since then, including Clipper Logistics and Wincanton, following a mandate to do just that after the separation.
As a result, the business has grown since then with the help of organic growth, but the stock has mostly been stuck in neutral due in part to a sluggish macroeconomic environment.
However, GXO seemed to break out of that range following its fourth-quarter earnings report on Wednesday as the company edged past estimates in its fourth-quarter earnings report.
GXO reported organic revenue growth of 3.5% and overall revenue growth of 7.9% to $3.51 billion, ahead of estimates at $3.48 billion. Adjusted earnings per share fell from $1.00 to $0.87 as the company lapped $30 million in other income from the quarter a year ago, and that result beat estimates at $0.83.
GXO stock jumped 9% on the news on a day when stocks were falling.
Image source: GXO.
A change in direction
GXO's strategy thus far has been defined largely by its pursuit of acquisitions. However, under new CEO Patrick Kelleher, the company is focused on consolidating its business, globalizing operations by implementing best practices and cutting-edge technology in GXO warehouses around the world, to expand margins, which Kelleher described as an opportunity for the company.
In fact, GXO's guidance for 2026 implies a margin expansion with the company targeting organic revenue growth of 4%-5%, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of 8% to $930 million-$970 million, and adjusted earnings-per-share growth of 20% to $2.85-$3.15.
The company has invested in new technology like GXO IQ, its AI-powered warehouse operating system that improves labor planning, inventory distribution, and movement, and it's going deeper with its testing of humanoid robots, which Kelleher predicted on the call would be a "game changer for our industry, and we have the pole position."
The company is currently testing pilots with a number of robotics companies, and expects to move forward with humanoid robots, which should further advance its technological advantage.
NYSE: GXO
Key Data Points
Can GXO keep gaining?
In addition to the AI adoption above, GXO is also making progress in key customer verticals like aerospace and defense, life sciences, and technology, including adding a hyperscaler customer last month.
Kelleher has spent his first few months with the company building out the management team, and his goal to standardize operations across the company makes sense, especially after multiple acquisitions in recent years.
If GXO can deliver on 2026 guidance, including 20% adjusted EPS growth, there's room for the stock to go higher, and over the long term, the company still has the potential to grow through acquisitions.
