RXO Still Unable To Capture Upcycle Economics, And Now At 20x Cycle-Average Earnings

RXO, Inc. delivered strong Q2 '26 revenue growth, but profits and margins failed to improve, with gross profit declining and adjusted EBITDA flat. Most revenue gains stemmed from higher freight rates and fuel prices, not underlying business economics, while working capital needs and leverage increased. Management targets mid-single-digit EBITDA margins through the cycle, but current valuation implies ~20x normalized earnings, even under optimistic scenarios.