Back to top

Image: Bigstock

C.H. Robinson (CHRW) Up 2.1% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

A month has gone by since the last earnings report for C.H. Robinson Worldwide (CHRW - Free Report) . Shares have added about 2.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is C.H. Robinson 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.

Earnings Beat at C.H. Robinson in Q2

C.H. Robinson’s second-quarter 2020 earnings of $1.06 per share surpassed the Zacks Consensus Estimate of 54 cents. However, the bottom line declined 13.1% year over year.

Although total revenues of $3,627.8 million outperformed the Zacks Consensus Estimate of $3,394.4 million, it decreased 7.2% year over year. This downside was due to lower pricing in truckload and less than truckload ("LTL") services.

Total operating expenses fell 9% year over year to $425.67 million, primarily due to short-term cost reductions of $40 million. However, operating ratio (operating expenses as a percentage of net revenues) deteriorated to 69.3% from 67.3% in the year-ago quarter. With respect to this metric, lower the value, the better.

The company returned $68.4 million to its shareholders through a combination of cash dividends ($67.2 million) and share repurchases ($1.2 million). Capital expenditures totaled $10.3 million in the quarter under review. Full-year capital expenses are expected in the low end of $60-$70 million, with the maximum reserved for technology spends.

Segmental Results

At North American Surface Transportation (“NAST”), total revenues were 2,475.29 million (down 13.8%) in the second quarter. Segmental revenues declined due to low pricing. Moreover, net revenues in the segment dropped 22% despite the Prime Distribution Services acquisition contributing 3 percentage points to segmental results. NAST results include Robinson Fresh transportation, which was previously reported under a separate segment.

Total revenues at Global Forwarding summed $707.82 million, up 19.5% year over year. Higher pricing in air, increased charter flights and larger shipment sizes boosted results. Net revenues at the segment climbed 14.8% year over year.

A historical presentation of the results on an enterprise basis is given below:

Transportation: The unit (comprising Truckload, Intermodal, LTL, Ocean, Air, Customs and Other logistics services) delivered net revenues of $586.02 million in the quarter under consideration, down 12% from the prior-year figure.

Truckload net revenues declined 25% year over year to $278.37 million, with volumes decreasing 4.5% year over year.  LTL net revenues also dropped 13% year over year to $106.96 million with volumes slipping 2% in the quarter.

At the Intermodal segment, net revenues increased 23.3% year over year to $7.77 million. Intermodal volumes were flat year over year. Net revenues at the Ocean transportation segment declined 7.7% year over year to $78.85 million. The same at the air transportation segment surged approximately 100% to $52.41 million. Meanwhile, customs net revenues slid 16.5% to $19.46 million.

However, Other logistics services’ net revenues rose 40.4% to $42.21 million.

Sourcing: Net revenues at the segment slipped 4% to $28.43 million.

Liquidity

This company exited the second quarter with cash and cash equivalents of $362.24 million compared with $447.86 million at the end of 2019. Liquidity at the end of the quarter was $1.6 billion. Long-term debt was 1,092.87 million, compared to $1,092.45 million at 2019-end.

Sourcing: Net revenue at the segment increased 3.9% year over year to $30.41 million.
Liquidity
Sourcing: Net revenue at the segment increased 3.9% year over year to $30.41 million.
Liquidity
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 $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.
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 $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.
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 $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 19.02% due to these changes.

VGM Scores

Currently, C.H. Robinson has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, C.H. Robinson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


C.H. Robinson Worldwide, Inc. (CHRW) - free report >>

Published in