XPO’s Buybacks Are Too Much of a Gas Guzzler

XPO Logistics Inc. may have shipped a bit too much of its cash to shareholders.

Since mid-December, the warehouse and transportation firm has spent nearly $2 billion purchasing its own shares, taking about a third of its stock off the market. Lowering shares outstanding should in theory raise the value of the remaining stock, which is one reason Wall Street tends to love buybacks. In the case of XPO, the shares did indeed respond, climbing some 26 percent over the past five and a half months. And yet, at $65 a share, the stock is still well below the $115 it traded for back in September, with many fewer shares outstanding. In a market that has been mostly buoyed by buybacks, XPO appears to be one of the few examples of companies whose stock repurchases may end up coming at too high a cost, by putting the squeeze on itself.