C.H. Robinson Worldwide Inc. (CHRW - Free Report) is slated to release third-quarter 2019 results on Oct 29, after the market closes.
The Zacks Consensus Estimate for the company’s third-quarter earnings has been revised downward 8.7% in the past 90 days. Given this backdrop, let’s delve into the factors that might have influenced the company’s quarterly performance.
Akin to the last two quarters of 2019, unfavorable pricing across most transportation service lines is likely to have affected the top line in the to-be-reported quarter. Notably, the Zacks Consensus Estimate for revenues suggests an approximate 8.4% decline from the year-ago reported number.
Additionally, the sluggish freight environment is expected to have affected volumes especially at the intermodal segment. The consensus mark for intermodal revenues indicates a massive decline of 28.2% from the year-ago reported figure.
Moreover, escalating operating expenses, thanks to higher personnel costs as well as selling, general and administrative expenses might have hurt the bottom line in the soon-to-be-reported quarter.
However, the Space Cargo buyout in March 2019 is expected to reflect on the company’s earnings numbers. Additionally, increased efficiency might get reflected in C.H. Robinson’s operating ratio (operating expenses as a percentage of net revenues) in the third quarter. Notably, lower the value of this key metric, the better.
Our proven model does not conclusively predict an earnings beat for C.H. Robinson this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here as highlighted below.
Earnings ESP: C.H. Robinson has an Earnings ESP of -1.80% as the Most Accurate Estimate is pegged at $1.14, lower than the Zacks Consensus Estimate of $1.16. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: C.H. Robinson has a Zacks Rank #3 but a negative Earnings ESP makes surprise prediction difficult.
Highlights of Q2 Earnings
In the last reported quarter, the company delivered a positive earnings surprise of 0.8%. The bottom line also improved 8% year over year. However, total revenues fell short of the Zacks Consensus Estimate and also declined 8.6% year over year due to unfavorable pricing across most transportation service lines.
Stocks to Consider
Investors interested in the broader Transportation sector may check out American Airlines Group Inc. (AAL - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Allegiant Travel Company (ALGT - Free Report) as these stocks possess the right mix of elements to beat on earnings in their next releases.
American Airlines has an Earnings ESP of +1.64% and a Zacks Rank of 3. The company will announce third-quarter earnings results on Oct 24. You can see the complete list of today’s Zacks #1 Rank stocks here.
Expeditors is a #3 Ranked stock and has an Earnings ESP of +0.74%. The company will report third-quarter 2019 results on Nov 5.
Allegiant has an Earnings ESP of +1.39% and is Zacks #3 Ranked. The company will announce third-quarter earnings results on Oct 24.
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