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C.H. Robinson (CHRW) Up 0.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for C.H. Robinson Worldwide (CHRW - Free Report) . Shares have added about 0.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Second-Quarter Earnings

C.H. Robinson’s second-quarter 2018 earnings per share of $1.13 beat the Zacks Consensus Estimate of $1.06. Moreover, the bottom line surged 44.9% year over year on higher revenues and lower tax rate.

Total revenues rose 15.3% year over year to $4,276.04 million, surpassing the Zacks Consensus Estimate of $4,196.96 million. The top line was also boosted by growth across all transportation service lines. Effective tax rate in the quarter reduced to 25.6% from 35.6% a year ago owing to the Tax Cuts and Jobs Act of 2017.

Total operating expenses increased 15.4% year over year to $452.5 million. However, operating ratio (operating expenses as a percentage of net revenues) of 67.4% compared favorably with 68.3% in the year-ago period.

During the quarter under review, the company returned $136.2 million to shareholders through a combination of dividends ($65.2 million) and share repurchases ($71 million), reflecting an increase of 29.8% year over year.


Segmental Results

Total revenues at North American Surface Transportation (NAST) were $2.88 billion (up 20.9%) in the second quarter while the same at Global Forwarding totaled $617.6 million (up 16.8%). At Robinson Fresh, the metric logged $621.02 million (up 5.5%) year over year.

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

Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) posted net revenues of $639.94 million in the quarter under consideration, up 18.8% from the prior-year period’s figure.

Truckload net revenues grew 20.8% year over year to $341.44 million. Additionally, net revenues at Less-than-Truckload rose 16.6% year over year to $119.19 million.

Net revenues at the Intermodal segment increased 10.5% year over year to $9.18 million.

Net revenues at the Ocean transportation segment improved 18.5% year over year to $87.04 million. The same at the Air transportation division rose 19.7% year over year to $30.91 million. Customs net revenues jumped 27.5% to $20.79 million.

Net revenues at Other logistics services climbed 5.2% year over year to $31.4 million.

Sourcing: Net revenues at the segment dropped 10.3% year over year to approximately $31.54 million.

Liquidity

The company exited the second quarter with cash and cash equivalents of $310.58 million compared with $333.89 million at the end of 2017. Long-term debt was $1,341.05 million compared with $750 million at 2017 end. 

Outlook

The company continues to anticipate strong demand for freight on the back of an upbeat economy. Additionally, it reiterates capital expenditures in the range of $60-$70 million for 2018 with the majority spending on technology. Full-year effective tax rate is still expected between 24% and 25%.

Liquidity
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 fresh estimates.

VGM Scores

At this time, C.H. Robinson has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for growth and to a lesser degree value.

Outlook

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




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