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Is a Beat in Store For C.H. Robinson (CHRW) Stock in Q4?

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Zacks Equity Research
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C.H. Robinson Worldwide, Inc. CHRW is slated to release fourth-quarter 2020 earnings numbers on Jan 26, after market close.

 The company has an average record with respect to earnings per share, having outpaced the Zacks Consensus Estimate in two of the last four quarters (missing the same in the remaining two). It has a trailing four-quarter earnings surprise of 13%, on average.

With this, let’s take a look at the factors that are expected to have influenced the company’s performance in the quarter.

C.H. Robinson Worldwide, Inc. Price and EPS Surprise

 

C.H. Robinson Worldwide, Inc. Price and EPS Surprise
C.H. Robinson Worldwide, Inc. Price and EPS Surprise

C.H. Robinson Worldwide, Inc. price-eps-surprise | C.H. Robinson Worldwide, Inc. Quote

 

Gradual recovery in the economy and improving freight-market conditions are likely to have aided C.H. Robinson’s fourth-quarter top line numbers. Favorable truckload pricing and increase in less than truckload (“LTL”) volumes are expected to have boosted revenues at the North American Surface Transportation (“NAST”) division, the primary revenue generator. The Zacks Consensus Estimate for fourth-quarter net NAST revenues indicates 3.6% increase from the year-ago quarter’s reported number.

Higher pricing in air, increased charter flights and larger shipment sizes are likely to have driven revenues in the Global Forwarding unit, as was seen in the third quarter. The consensus mark for Global Forwarding net revenues hints at a 17.8% increase from the fourth-quarter 2019’s reported number.

Additionally, cost-reduction initiatives are anticipated to have boosted C.H. Robinson’s bottom line in the fourth quarter.

In spite of improvement in freight environment, there remains an uncertainty over the company’s prospects as the coronavirus pandemic continues unabated. The freight scenario is still substantially weak compared with the year-ago levels.  The consensus mark for net LTL revenues hints at a 7.9% decline from fourth-quarter 2019’s reported number.

Earnings Whispers

The proven Zacks model predicts an earnings beat for C.H. Robinson in the fourth quarter of 2020. This is because 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: C.H. Robinson has an Earnings ESP of +1.01% as the Most Accurate Estimate is pegged at 95 cents, more than the Zacks Consensus Estimate of 94 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Highlights of Q3 Earnings

C.H. Robinson’s third-quarter 2020 earnings of $1 per share surpassed the Zacks Consensus Estimate of 99 cents. However, the bottom line declined 6.5% year over year. Total revenues of $4,224.8 million not only outperformed the Zacks Consensus Estimate of $3,909 million, but also increased 9.6% year over year. The upside can be attributed to higher pricing and increased volumes across most of the company’s service lines, thanks to gradual recovery in the freight environment.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider Canadian Pacific Railway Limited CP, CSX Corporation CSX and Landstar System, Inc. LSTR as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Canadian Pacific has an Earnings ESP of +0.12% and is Zacks #3 Ranked, presently. The company will release fourth-quarter 2020 results on Jan 27.

CSX has an Earnings ESP of +0.47% and a Zacks Rank of 3 at present. The company will release fourth-quarter 2020 results on Jan 21.

Landstar System has an Earnings ESP of +2.99% and is currently a #3 Ranked player. The company will release fourth-quarter 2020 results on Jan 27.

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