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What's in Store for C.H. Robinson (CHRW) in Q4 Earnings?

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C.H. Robinson Worldwide, Inc. (CHRW - Free Report) is scheduled to report fourth-quarter 2018 results on Jan 29, after market close.

In the third quarter, the company delivered impressive results, with earnings and revenues beating the Zacks Consensus Estimate. The bottom line was favored by higher revenues and a lower effective tax rate. Also, the top line improved on a year-over-year basis.

C.H. Robinson has an impressive earnings surprise history. The company’s earnings surpassed the consensus mark in each of the trailing four quarters, the average being 8%.

Factors at Play

We expect C.H. Robinson’s fourth-quarter results to be aided by strong segmental performances on the back of impressive freight demand. Favorable pricing are likely to buoy the top line in the to-be-reported quarter.

From the fourth quarter of 2016, the company has been reporting through three segments — North American Surface Transportation (“NAST”), Global Forwarding, and Robinson Fresh. Bulk of revenues is derived from the NAST segment. The Zacks Consensus Estimate for fourth-quarter 2018 NAST revenues is pegged at $2,823 million, reflecting a rise from $2,619 million in the prior-year quarter.

Also, the current tax law, which reduces corporate tax rate significantly, is expected to drive the bottom line in the to-be-reported quarter. Furthermore, consistent improvement in the company's operating ratio (operating expenses as a percentage of net revenues) is likely to boost bottom-line growth in the fourth quarter. Lower value of this key metric bodes well for the company.

Moreover, C.H. Robinson’s growth-by-acquisition policy is also encouraging. Similar to the last few quarters, the company’s Milgram & Company buyout is expected to contribute to the top line in the to-be-reported quarter.

However, the bottom line is expected to stay under pressure in the to-be-reported quarter due to high capital expenditures and operating costs.

 

Earning Whispers

Our proven model does not indicate earnings beat for C.H. Robinson this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.

Zacks Rank: C.H. Robinson carries a Zacks Rank #3.

Earnings ESP: C.H. Robinson has an Earnings ESP of -1.16%. The Most Accurate Estimate is at $1.19 per share, lower than the Zacks Consensus Estimate of $1.20. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the Zacks Transportation sector may check other companies with the right combination of elements to beat estimates in the upcoming releases:

Expeditors International of Washington, Inc. (EXPD - Free Report) has an Earnings ESP of +0.39% and a Zacks Rank #1.  The company will release fourth-quarter 2018 results on Feb 19. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcBest Corporation (ARCB - Free Report) has an Earnings ESP of +4.78% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Jan 30.

Hawaiian Holdings, Inc. (HA - Free Report) has an Earnings ESP of +1.63% and a Zacks Rank #3.  The company will release fourth-quarter 2018 results on Jan 29.

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