Here's Why Investors Should Avoid C.H. Robinson (CHRW) Now
C.H. Robinson Worldwide, Inc. CHRW is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 5.7% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 2.7% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank and Style Score: C.H. Robinson currently carries a Zacks Rank #5 (Strong Sell). Moreover, the company’s current Value Style Score of C shows its unattractiveness.
Unimpressive Price Performance: CHRW has declined 12.8% over the past year against its industry’s 16.7% growth.
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Other Headwinds: C.H. Robinson's second-quarter 2023 total revenues of $4421.9 million lagged the Zacks Consensus Estimate of $4646.5 million and plunged 35% year over year owing to lower pricing in the company’s ocean and truckload services. Also, quarterly earnings of 90 cents per share dipped 66.2% year over year.
Quarterly results were impacted by soft freight markets globally. 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 second-quarter 2023 due to lower adjusted gross profit per transaction in truckload and ocean. Adjusted operating margin of 19.9% contracted 2,560 basis points.
Bearish Industry Rank: The industry, to which CHRW belongs, currently has a Zacks Industry Rank of 235 (of 250 plus groups). Such an unfavorable rank places CHRW in the bottom 6% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are FedEx Corporation FDX and Ryder System R.
FDX’s consistent efforts to reward shareholders through dividends and buybacks are encouraging. It presently carries a Zacks Rank #2 (Buy).
FedEx's liquidity position is also impressive. To navigate the weaker-than-expected business environment, FDX is cutting costs.
Ryder, which currently sports a Zacks Rank #1 (Strong Buy), is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases. You can see the complete list of today’s Zacks #1 Rank stocks here.
Despite weak market conditions, Ryder reported better-than-expected earnings in second-quarter 2023. The company has an impressive earnings surprise history. R has surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark once), the average beat being 11.2%.
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Ryder System, Inc. (R) : Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
FedEx Corporation (FDX) : Free Stock Analysis Report
