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CH Robinson Worldwide Inc.  (CHRW - Analyst Report) is slated to report its second-quarter 2014 financial results on Jul 29, after the market closes. In the last reported quarter, the company had delivered a 1.61% positive earnings surprise. Let’s see how things are shaping up prior to this announcement.

Factors at Play this Quarter

CH Robinson is rated as one among the first-in-class third-party logistics (3PL) companies given its consistent growth rate over the past few years. The company will execute its go-to-market strategies with its current resources and will expand its business through the investments made in the last couple of years. We believe that the demand of 3PL services is rapidly growing as shippers seek cost effective one-stop solutions for their freight forwarding requirements. Given the company’s advanced technology and service capabilities, we believe it is poised to capture a significant share in the current freight transportation market. We expect the growing demand for customs brokerage and transportation management services to help the company grow beyond its core offering of truck brokerage.

However, we foresee increased competition in the truckload market owing to the rising numbers of third-party freight carriers. CH Robinson considers that its market share of 2% to 3% in the truckload industry may not be sufficient to sustain revenue growth in this sector. However, the volatile nature of the truckload market makes it difficult for the company to provide future expectations. Further, increased competition will also make it difficult to sustain current market share, leading to significant headwinds for future growth. The company does not own or control the transportation assets that deliver customers’ freight. CH Robinson depends on independent third parties to provide truck, rail, ocean, and air services. If the company is unable to secure sufficient equipment or other transportation services to meet customer commitments, they could switch to competitors temporarily or permanently, affecting the company's profits.

Earnings Whispers?

Our proven model indicates that CH Robinson is likely to beat earnings this quarter.This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Since the company fulfils both these parameters as demonstrated below, we are confident of a positive earnings surprise at the company this season.  

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.60% for CH Robinson.

Zacks Rank: CH Robinson carries a Zacks Rank #2, which further increases the predictive power of ESP.

Other Stocks to Consider

Here are some companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

ArcBest Corporation (ARCB - Snapshot Report) with earnings ESP of +5.56% and a Zacks Rank #2.

Expeditors International of Washington Inc. (EXPD - Analyst Report) with earnings ESP of +4.26% and a Zacks Rank #2.

Con-way Inc. (CNW - Snapshot Report) with earnings ESP of +2.67% and a Zacks Rank #2.

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