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

A month has gone by since the last earnings report for C.H. Robinson Worldwide (CHRW). Shares have lost about 0.7% 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 Q2

C.H. Robinson's earnings of $1.22 per share surpassed the Zacks Consensus Estimate by a penny. The bottom line also improved approximately 8% year over year.

Total revenues came in at $3,908.8 million, falling short of the Zacks Consensus Estimate of $4,044.8 million. Moreover, the top line declined 8.6% year over year. The downturn can be attributed to unfavorable pricing across most transportation service lines.

Total operating expenses increased 3.4% year over year to $467.68 million due to higher selling, general and administrative expenses. Meanwhile, operating ratio (operating expenses as a percentage of net revenues) improved marginally to 67.3% from 67.4% in the year-ago quarter. Notably, lower the value of the metric the better.

Impressively, the company returned $179.8 million to its shareholders through a combination of cash dividends ($69.3 million) and share repurchases ($110.5 million), reflecting an increase of 32% year over year. Capital expenditures totaled $17.7 million in the quarter under review.

Segmental Results
 
At North American Surface Transportation (NAST), total revenues were $2.87 billion (down 9.2%) in the second quarter. The downside was due to weak pricing. Net revenues at the segment rose 5.8%. Notably, NAST results include those of Robinson Fresh transportation, which were previously reported under a separate segment.

Total revenues at Global Forwarding summed $592.48 million, down 4.1%. Low pricing in ocean and air as well as contracted air volumes affected results. Net revenues at the segment also dipped 1.5%.

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 $665.61 million in the quarter under consideration, up 4% from the prior-year period’s figure.

Truckload net revenues grew 8.8% year over year to $371.35 million. Additionally, net revenues at Less-than-Truckload inched up 3.2% year over year to $122.99 million.

At the Intermodal segment, net revenues plunged 31.4% year over year to $6.3 million.

Net revenues at the Ocean transportation segment slid 1.8% year over year to $85.47 million. The same at the Air transportation division dropped 15.4% year over year to $26.13 million. Customs net revenues augmented 12.1% to $23.31 million.

Other logistics services’ net revenues decreased 4.3% year over year to $30.06 million.

Sourcing: Net revenues at the segment declined 6.1% year over year to approximately $29.6 million.

Liquidity

The company exited the second quarter with cash and cash equivalents of $355.31 million compared with $378.6 million at the end of 2018. Long-term debt was $1.25 billion compared with $1.34 billion at 2018 end.

2019 Outlook
 
C.H. Robinson still expects capital expenditures between $80 million and $90 million for 2019 with the majority to be spent on technology. Additionally, effective tax rate is still estimated in the 24-25% band for the year. Meanwhile, the company expects the sluggish freight scenario to persist through the remaining months of 2019.

 

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 estimates review. The consensus estimate has shifted -6.95% due to these changes.

VGM Scores

At this time, C.H. Robinson has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise C.H. Robinson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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