After looking at C.H. Robinson Worldwide, Inc.'s (NasdaqGS:CHRW) latest earnings update (30 September 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
How CHRW fared against its long-term earnings performance and its industry
CHRW's trailing twelve-month earnings (from 30 September 2019) of US$665m has increased by 5.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.2%, indicating the rate at which CHRW is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the entire industry is facing the same headwind.
In terms of returns from investment, C.H. Robinson Worldwide has invested its equity funds well leading to a 40% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US Logistics industry of 6.3%, indicating C.H. Robinson Worldwide has used its assets more efficiently. However, its return on capital (ROC), which also accounts for C.H. Robinson Worldwide’s debt level, has declined over the past 3 years from 46% to 28%.
What does this mean?
Though C.H. Robinson Worldwide's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research C.H. Robinson Worldwide to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CHRW’s future growth? Take a look at our free research report of analyst consensus for CHRW’s outlook.
- Financial Health: Are CHRW’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
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