GXO Logistics (GXO) could profit from the growth of ecommerce. To explain, GXO builds the automated systems that make ecommerce possible.
For example, GXO’s technology solutions include advanced automation, automated sortation, digital warehouses, and intelligent robotics. For example, GXO builds autonomous goods-to-persons systems to speed delivery of online orders. Similarly, GXO offers robotic arms that engrave products, program electronic devices, and build pallets of packaged goods.
GXO also builds automatic sortation systems of automatic conveyor belts that move boxes around warehouses. Advanced automation includes swarms of robots that move merchandise around fulfillment centers. GXO claims its predictive supply chain manages 10,000 to 100,000 orders a week.
They employ this technology in digital warehouses that help companies such as Nestlé deploy data-driven distribution. In this system, smart robots take full pallets of product and build pallets. GXO claims this system can pack 175 layers an hour. Similarly, automated in-feed and out-feed flows that can move over 61,000 cases a week.
GXO services include aftermarket support, ecommerce support, aftermarket support, manufacturing support, fulfillment, warehousing, manufacturing support, reverse logistics, and supply chain optimization.
A GXO Direct Distribution Network offers North American shippers a flexible and variable cost distribution. They claim this network can position and reposition inventories within two-days ground transportation of most of the US population. They call the Network a Fulfillment-as-a-Service (FaaS) model.
Thus, GXO Logistics (GXO) could be a value investment for ecommerce. To explain, GXO builds the infrastructure that makes ecommerce possible.
The value case for GXO is that ecommerce companies will need its services no matter what product they sell. For example, both a bookseller and an auto-parts company could use a digital warehouse. Thus, GXO could be a better ecommerce value stock than software providers, such as Shopify (SHOP).
Warehousing is a growing business. Statista estimates the number of warehousing and storage businesses in the US grew from 15,255 in 2011 to 20,002 in 2022.
Similarly, Statista estimates US ecommerce revenues grew from $862.4 billion in 2021 to $904.9 billion in 2022. Statista forecasts US ecommerce revenues will grow to $1.111 trillion in 2023, $1.281 trillion in 2024, $1.479 trillion in 2025, $1.582 trillion in 2026, and $1.705 trillion in 2027.
Thus, GXO provides infrastructure for a growing business segment. Hence, GXO Logistics could be a growth stock in ecommerce.
GXO Logistics (GXO) is a growing company. Its quarterly revenues grew from $1.974 billion on 30 September 2021 to $2.287 billion on 30 September 2022.
Stockrow estimates GXO’s revenues grew by 15.86% in the quarter ending on 30 September 2022. In contrast, the revenues grew by 24.62% in the quarter ending on 30 September 2021.
Similarly, the quarterly gross profit grew by $323 million in the quarter ending on 30 September 2021 to $402 million in the quarter ending on 30 September 2022. Plus, the quarterly operating income grew from $36 million on 30 September 2021 to $72 million on 30 September 2022.
In comparison, the quarterly operating cash flow grew from $105 million on 30 September 2021 to $116 million on 30 September 2022. Conversely, the quarterly ending cash flow went from -$51 million on 30 September 2021 to $50 million on 30 September 2022. The quarterly ending cash flow rose to $312 million on 31 March 2022.
GXO is borrowing money. It reported a quarterly financing cash flow of $887 million on 30 June 2022.
GXO (GXO) has some cash. It had $275 million in cash and short-term investments on 30 September 2021 that grew to $434 million on 30 September 2022.
In contrast, GXO’s total debt grew from $974 million on 30 September 2021 to $1.883 billion on 30 September 2022. That means GXO’s debt doubled in a year.
Yet the company has more value. Its total assets grew from $7.133 billion on 30 September 2021 to $8.806 billion on 30 September 2022. In contrast, the share price fell from $87.89 on 20 January 2022 to $51.02 on 27 January 2023.
If you are looking for a growing ecommerce company with a falling share price. I think GXO Logistics is worth examining.