After reading C.H. Robinson Worldwide, Inc.'s (NasdaqGS:CHRW) most recent earnings announcement (31 December 2019), I found it useful to look back at how the company has performed in the past 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 a crucial aspect. Below is a brief commentary on my key takeaways.
Did CHRW perform worse than its track record and industry?
CHRW's trailing twelve-month earnings (from 31 December 2019) of US$577m has declined by -13% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.3%, indicating the rate at which CHRW is growing has slowed down. What could be happening here? Well, let's look at what's going on with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, C.H. Robinson Worldwide has invested its equity funds well leading to a 35% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the US Logistics industry of 5.8%, 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 45% to 26%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I suggest 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 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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