What: Shares of XPO Logistics, Inc. (NYSE:XPO) are up 11.6% at 11:02 a.m. ET on Feb. 4, with no apparent news driving the stock's big move. But after falling about 9% to start the week following last Friday's announcement that the company would cut 190 jobs from its Con-Way acquisition, shares are up almost 15% since the 2nd.
So what: Shares of XPO have largely traded down over the past year, as XPO has shifted from an asset-light business that relied on third-party contractors, to acquisition-driving growth of its in-house shipping and trucking operations. The recent Con-Way job cuts are part of a planned cost reduction, as the company integrates that business with other in-house operations and acquisitions. The XPO release described the jobs it was cutting as mostly back-office, administrative, and management -- largely redundant to what the company had in place before the acquisition and not simply cuts for the sake of cutting cost alone.
Now what: The move up in the past couple of trading days does correspond to United Parcel Service (NYSE:UPS) releasing its fourth-quarter earnings on Feb. 2. UPS reported its highest-ever fourth-quarter earnings per share of $1.57, up 26% from the prior year and full-year 2015 EPS up 14% to $5.43, also the company's best-ever for a full year.
XPO says it's not trying to be a UPS or FedEx, and instead is focused on more logistics and trucking operations, and PACCAR's (NASDAQ:PCAR) earnings release last week supports that there is still strong demand for trucking in both North America and Europe.
PACCAR reported declines in truck units and revenue in North America in the fourth quarter, but just finished up its most profitable year, with $19.12 billion in sales driving $1.6 billion in net income. The company said that 278,000 class-8 heavy-duty trucks were sold in U.S. and Canada in 2015, the most in a decade, and that 269,000 of the corresponding class of trucks were sold in Europe, the most there since 2008.
And while truck sales are expected to decline in 2016 in North America, it is still likely to be one of the best years in the past 10, and there remains strong demand for trucking. On the PACCAR earnings call, Director of Investor Relations Ken Hastings said that freight tonnage levels in North America are at some of the highest levels and are estimated to grow 2%-3% in 2016. CEO Ron Armstrong said that European economic growth in 2016 is expected to be around 1.7%, which would support continued demand for shipping and trucking services.
These things may not be the direct cause of today's stock pop, but they are good for XPO Logistics' prospects heading into 2016 and beyond.