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Why Is C.H. Robinson (CHRW) Up 7.7% Since the Last Earnings Report?

Zacks Equity Research
Updated

It has been about a month since the last earnings report for C.H. Robinson Worldwide, Inc. CHRW. Shares have added about 7.7% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Fourth Quarter Earnings

C.H. Robinson Worldwide Inc.'s fourth-quarter 2016 earnings per share of $0.86 beat the Zacks Consensus Estimate of $0.84. However, earnings declined 2.2% year over year due to higher costs.

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Total revenue increased 6.4% year over year to $3,415 million and beat the Zacks Consensus Estimate of $3,335 million. Volume growth drove the top line. Total operating expenses climbed 3.3% year over year to $368 million, resulting in an operating ratio (operating expenses as a percentage of net revenue) of 65.5% compared with 62.4% a year ago.

From this quarter, the company has started reporting through three segments – North American Surface Transportation (“NAST”), Global Forwarding, and Robinson Fresh. While total revenue at NAST was $2.3 billion, revenues at the Global Forwarding division were $476 million and  total revenue at Robinson Fresh was $529.4 million.

Below we give a historical presentation of results on an enterprise basis

Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $535.6 million in the fourth quarter of 2016, down 1.5% from the year-ago quarter. Lower truckload margins hurt results.

Truckload net revenue declined 12.4% year over year to $296.7 million. Net revenue at Less-than-Truckload increased 5.2% year over year to 94.3 million.

Net revenue at the Intermodal segment declined 14.9% year over year to $7.5 million. The presence of alternative lower cost truck market hurt Intermodal opportunities.

Net revenue at the Ocean transportation segment increased 23.1% year over year to $69 million. The same at the Air transportation division increased 27.6% year over year to $23.7 million. Customs net revenue improved 48.5% to $15.9 million.

Net revenue at Other logistics services jumped 33.9% year over year to $28.4 million on the back of growth in managed services.

Sourcing: Net revenue at the segment fell 3.5% year over year to $25.9 million.

Liquidity

C.H. Robinson exited 2016 with cash and cash equivalents of approximately $247.7 million compared with $168.3 million at the end of 2015. Long-term debt was $500 million at the end of 2016, unchanged from the figure recorded at the end of 2015.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower. While looking back an additional 30 days, we can see even more upward momentum. There has been only one move down in the last two months.

C.H. Robinson Worldwide, Inc. Price and Consensus

 

C.H. Robinson Worldwide, Inc. Price and Consensus | C.H. Robinson Worldwide, Inc. Quote

VGM Scores

At this time, C.H. Robinson's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

The stock has Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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