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Why Is C.H. Robinson (CHRW) Down 1.3% Since Last Earnings Report?

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A month has gone by since the last earnings report for C.H. Robinson Worldwide (CHRW - Free Report) . Shares have lost about 1.3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is C.H. Robinson due for a breakout? 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 catalysts.

Earnings Beat at C.H. Robinson in Q1

C.H. Robinson’s first-quarter 2019 earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.13. The bottom line also improved 14.9% year over year.

Total revenues came in at $3,751.2 million, which fell short of the Zacks Consensus Estimate of $3,968.7 million and also declined 4.4% year over year. The downturn can be attributed to unfavorable pricing across most transportation service lines.

Total operating expenses increased 4.6% year over year to $454.3 million owing to higher personnel costs and selling, general and administrative expenses. However, the operating ratio (operating expenses as a percentage of net revenues) of 66.9% compared favorably with 69.3% in the year-ago period. Notably, lower the value of the metric the better.

Impressively, the company returned $146.4 million to its shareholders through a combination of cash dividends ($69.7 million) and share repurchases ($76.7 million), reflecting an increase of 8.7% year over year. Capital expenditures totaled $13.9 million in the quarter under review.


Segmental Results  

At North American Surface Transportation (NAST), total revenues were $2.8 billion (down 3.8%) in the first quarter, down 3.8%. Net revenues at the segment increased 11%.Notably, NAST results include those of Robinson Fresh transportation, which were previously reported under a separate segment.

Total revenues at Global Forwarding summed $537.6 million, down 2.9%. Net revenues at the segment increased 3.4%.

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) delivered net revenues of $651.7 million in the quarter under consideration, up 9.3% from the prior-year period’s figure.

Truckload net revenues grew 14.4% year over year to $378 million. Additionally, net revenues at Less-than-Truckload improved 3.6% year over year to $116.3 million.

At the Intermodal segment, net revenues decreased 4% year over year to $6.1 million. Net revenues at the Ocean transportation segment climbed 3.9% year over year to $71.5 million. The same at the Air transportation division declined 4.5% year over year to $27.6 million. Customs net revenues augmented 5.9% to $21.9 million.

Other logistics services’ net revenues inched up 5.2% year over year to $30.4 million.

Sourcing: Net revenues at the segment decreased 9.2% year over year to approximately $27.1 million.

Liquidity

The company exited the first quarter with cash and cash equivalents of $445.5 million compared with $378.6 million at the end of 2018. Long-term debt was $1,341.61 million compared with $1,341.35 million at 2018 end.

2019 Outlook

C.H. Robinson anticipates capital expenditures between $80 million and $90 million for 2019, with the majority to be spent on technology. Additionally, the effective tax rate is estimated in the 24-25% band for the year. 

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 a downward trend in fresh estimates.

VGM Scores

Currently, C.H. Robinson has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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