Why XPO Logistics Inc (NYSE: XPO) stock is going gangbusters today

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XPO Logistics Inc (NYSE: XPO) stock surged over 8% on 5th May, 2020 (as of 12:40 pm GMT-4 ; Source: Google finance) despite sharp fall in quarterly profit and pulled its 2020 forecasts after the COVID-19 pandemic affected the demand for consumer and business deliveries. But, the company has posted better than expected results for the first quarter of FY 20. The company said first-quarter net income attributed to common shareholders plunged to $21 million from $43 million, a year earlier. For the first quarter of 2020, the company has generated $180 million of cash flow from operations, compared to a cash usage of $96 million for the same period in 2019. For the first quarter of 2020, the company has generated $95 million of free cash flow, a non-GAAP measure, compared to a cash usage of $96 million for the same period in 2019. The company has withdrawn its full-year 2020 guidance due to uncertainty.

XPO in the first quarter of FY 20 has reported the adjusted earnings per share of 47 cents, while adjusted revenue of $3.86 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue by 0.07%. XPO’s core transportation segment revenue fell almost 8% to $2.46 billion, due to COVID-19 and the loss of a large portion of business from Amazon.com Inc, which is its largest customer. The company’s logistics segment has reported revenue of $1.44 billion for the first quarter 2020, compared to $1.49 billion for the same period in 2019. The decline in revenue was due to the company’s elimination of certain low-margin business, the downsizing of business by the company’s largest customer, and the negative impact of COVID-19 in Europe.

Additionally, in the first quarter 2020, the company had repurchased 1.7 million shares of XPO common stock at an average price per share of $66.58, for a total cost of about $114 million. At the end of March 31, 2020, XPO had about 91 million shares of common stock outstanding.

Meanwhile, at the end of March, 2020, XPO had total cash and borrowing capacity of $1.3 billion. In April, the company had issued $850 million of 6.25% senior notes maturing in 2025 and added a new $350 million senior secured credit facility. XPO has no significant debt maturing until June 2022.

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