C.H. Robinson (CHRW) Grapples With Challenging Freight Market
C.H. Robinson Worldwide, Inc. (CHRW) continues to grapple with lower pricing in the ocean and truckload services and overall weak freight demand.
C.H. Robinson reported lower-than-expected fourth-quarter 2023 results. Quarterly earnings of 50 cents per share missed the Zacks Consensus Estimate of 80 cents and declined year over year. Total revenues of $4,221.9 million also lagged the Zacks Consensus Estimate of $4,352.1 million and declined 16.7% year over year owing to lower pricing in the company’s ocean and truckload services.
Additionally, the soft freight market continues to remain a woe. Highlighting the weak freight demand, the Cass Freight Shipments Index has deteriorated month over month from March to December 2023, which confirms the overall declining trend. Overall, weak demand and high inventories lead to a more competitive marketplace and subdued transportation rates. Freight demand has also been hurt by below-par trade from China.
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 2024 are anticipated to be between $85 million and $95 million.
Partly due to these headwinds, shares of CHRW have declined 28.5% over the past year compared with the 16.6% loss of the industry it belongs to.
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Despite such headwinds, CHRW's consistent initiatives to reward shareholders through dividends and share repurchases are encouraging. During 2023, CHRW repurchased shares worth $63.88 million and paid $291.56 million in cash dividends.
A decrease in operating expenses aids C.H. Robinson’s bottom-line results. Operating expenses decreased 10.2% year over year to $2.1 billion in 2023. Personnel expenses also declined14.9% to $1.5 billion, owing to cost optimization efforts and lower variable compensation.
Zacks Rank and Stocks to Consider
Currently, C.H. Robinson currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the Zacks Transportation sector are Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB and SkyWest, Inc. SKYW. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wabtec has an expected earnings growth rate of 12.70% for 2024. WAB delivered a trailing four-quarter earnings surprise of 7.11%, on average.
The Zacks Consensus Estimate for WAB’s 2024 earnings has improved 2.9% over the past 90 days. Shares of WAB have gained 27.1% in the past year.
SkyWest's fleet-modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 6.3% over the past 90 days. Shares of SKYW have surged 216.9% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.
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C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
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