C.H. Robinson (CHRW) Gains From Dividends Amid Freight Woes
C.H. Robinson Worldwide (CHRW) is benefiting from a decrease in operating expenses and shareholder-friendly initiatives adopted by the company.
C.H. Robinson’s measures to reward shareholders through dividends and share buybacks are encouraging. In November 2022, the company hiked its dividend to 61 cents per share from 55 cents. CHRW is also active on the buyback front. C.H. Robinson rewarded its shareholders in 2022 through a combination of cash dividends ($285.32 million) and share repurchases ($1,488.28 million). Continuing the shareholder-friendly approach, in the second quarter of 2023, CHRW repurchased shares worth $33.4 million and paid $72.8 million in cash dividends.
A decrease in operating expenses aids C.H. Robinson’s bottom-line results. Operating expenses declined 5.2% year over year to $532.9 million in the second quarter of 2023. Personnel expenses decreased 15.2% to $377.3 million, primarily due to cost optimization efforts and lower variable compensation.
On the flip side, C.H. Robinson's second-quarter 2023 total revenues were unfavorably impacted by lower pricing in its ocean and truckload services. Quarterly results were impacted by soft freight markets globally. Overall, weak demand, high inventories and excess capacity led to a more competitive marketplace and subdued transportation rates.
Adjusted gross profit fell 35.5% year over year to $665.5 million in the second quarter of 2023, owing to lower adjusted gross profit per transaction in truckload and ocean services. Adjusted operating margin of 19.9% declined 2,560 basis points.
The company’s focus on making investments in technology, though aimed at long-term growth prospects, might weigh on C.H. Robinson’s bottom line in the near term. Capital expenditures for 2023 are anticipated to be between $90 million and $100 million.
Zacks Rank and Stocks to Consider
Currently, C.H. Robinson carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Transportation sector are United Airlines (UAL) and SkyWest, Inc. (SKYW). United Airlines presently sports a Zacks Rank #1 (Strong Buy), while SkyWest carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 21.44%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 18.9% over the past 90 days. Shares of UAL have soared 34.5% year to date.
SkyWest's fleet-modernization efforts are commendable.A fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a fall in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 144.6% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.
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