Is GXO Logistics Still a Buy After a Strong 2025 Run?

The question on investors' minds is whether GXO Logistics (GXO) remains a compelling long-term bet despite its robust performance in 2025. The company's third-quarter results, released in October 2025, underscored its resilience: revenue hit $3.4 billion, an 8% year-over-year increase, with organic growth of 4% and new business wins totaling $280 million according to the Q3 results. Yet, the stock's valuation-trading at a P/E ratio of 66.9, far above the global industry average of 16.1x and its peer group average of 21.5x-has sparked debate about whether the optimism is justified as reported by Webull.

Valuation Tension: A High Price for Growth

GXO's elevated P/E ratio reflects investor confidence in its long-term potential but also raises red flags. Analysts from Webull and others have noted that while the stock's current price of $52.01 implies a discount to their estimated fair value of $62.12, the multiple remains precarious if growth falters according to analysis. This tension between price and performance is a classic dilemma in equity markets: Is the company's future cash flow potential sufficient to justify the premium, or is the market overbaking in assumptions?

The answer hinges on GXO's ability to deliver on its strategic initiatives. The company has outlined a clear path to growth through technology integration, robotics, and the successful absorption of Wincanton, a UK-based logistics firm. These efforts are projected to add $110 million to $130 million in adjusted EBITDA by 2027, with Wincanton alone contributing an additional $120 million to $130 million according to analysts. Such incremental gains could justify the valuation if they translate into sustainable margins.

Long-Term Growth: A Strategic Edge

GXO's long-term prospects appear bolstered by its market positioning. For 2026, analysts project revenue of $14.0 billion, an 8.2% increase from 2025 estimates based on forecasts. This trajectory is underpinned by its leadership in contract logistics, a sector expected to expand as global supply chains grow more complex. Tonivest Research and Seeking Alpha analysts have upgraded GXO to "Buy," citing an 18.5% to 29.1% potential upside over the next two years according to analyst reports.

The company's North America growth strategy, which includes expanding its network of automated warehouses, further strengthens its case. As stated by management in its Q3 earnings call, "We are not just reacting to market shifts-we are shaping them," a sentiment that resonates with investors seeking proactive leadership as reported in the earnings call.

Risks: Decelerating Momentum and Leverage

However, the path to $14 billion is not without obstacles. By 2026, GXO's revenue growth is expected to slow to an annualized 6.5%, a marked deceleration from the 14% it averaged over the past five years according to analyst projections. While this rate still outpaces the industry's 3.4% average, it signals a maturing business that may struggle to sustain hypergrowth.

Financial leverage adds another layer of risk. GXO carries $2.7 billion in total debt and a current ratio of 0.71, suggesting limited liquidity to weather unexpected downturns according to financial health analysis. Macroeconomic headwinds-such as rising tariffs and shifting trade patterns-could further strain operations by disrupting customer demand and inventory flows as noted by risk analysis.

Balancing the Equation

The crux of the matter lies in reconciling GXO's current valuation with its future potential. A P/E of 66.9 is unsustainable for most firms, but for a company with a clear growth roadmap and strong balance sheet (despite its debt), it may be a temporary overhang. The key is whether GXO can execute its strategic priorities without missing earnings targets.

For now, the evidence tilts toward optimism. The company's ability to secure new business, enhance margins through automation, and integrate acquisitions positions it well for 2026 and beyond. Yet, investors must remain vigilant. If macroeconomic conditions deteriorate or growth slows faster than projected, the valuation premium could evaporate.

In the end, GXO remains a "Buy" for those with a multi-year horizon and a tolerance for volatility. The stock is not without risk, but its long-term growth story-anchored in innovation and market share gains-justifies the current price, provided management delivers.