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Is a Beat in Store for C.H. Robinson (CHRW) in Q1 Earnings?

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C.H. Robinson Worldwide Inc. (CHRW - Free Report) is scheduled to announce its first-quarter 2017 results on Apr 25, after the market closes.

In the fourth-quarter 2016, the company’s earnings per share of 86 cents beat the Zacks Consensus Estimate of 84 cents. However, earnings declined 2.2% year over year due to higher costs. 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. 

Why a Likely Positive Surprise?

Our proven model shows that C.H. Robinson is likely to beat the Zacks Consensus Estimate this quarter as well because it has the perfect combination of two key ingredients.

Zacks ESP: The Earnings ESP for C.H. Robinson is +2.50% as the Most Accurate estimate is pegged at 82 cents per share while the Zacks Consensus Estimate is at 80 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: C.H. Robinson carries a Zacks Rank #3 (Hold). Please note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors at Play

We are encouraged by the company's efforts to reward shareholders. In the first quarter, the company’s board declared a regular quarterly cash dividend of 45 cents per share. Its expansion efforts are also encouraging. In Feb 2017, the company announced the opening of new offices in Asia and Canada. Following these expansions, C.H. Robinson now has 15 additional Global Forwarding offices.The expanded product portfolio should boost the top line in this quarter.

We expect higher costs to limit bottom-line growth in the first quarter as well as it did in the fourth quarter. We remain concerned about the slow economic growth in certain key markets in addition to adverse foreign exchange movements. The company's high debt levels also raise concerns. 

Price Performance

Shares of C.H. Robinson outperformed the Zacks categorized Transportation - Services industry over the last three months. The stock gained 2.32% while the industry lost 2.35%.

An earnings beat in Q1 is likely to further boost the stock.

Other Stocks to Consider

Investors interested in the broader transportation space may also consider American Airlines Group (AAL - Free Report) , Air Lease Corporation (AL - Free Report) and Norfolk Southern Corporation (NSC - Free Report) as our model shows these possess the right combination of elements to post an earnings beat in the first quarter.

American Airlines has an Earnings ESP of +7.55% and a Zacks Rank #3. The company will report first-quarter 2017 results on Apr 27. You can see the complete list of today’s Zacks #1 Rank stocks here.

Air Lease has an Earnings ESP of +1.16% and a Zacks Rank #3. The company will report first-quarter 2017 results on May 4.

Norfolk Southern has an Earnings ESP of +2.24% a Zacks Rank #3. The company will report first-quarter 2017 results on Apr 26.

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