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What's in the Cards for C.H. Robinson (CHRW) in Q2 Earnings?

Zacks Equity Research

C.H. Robinson Worldwide Inc. CHRW is slated to release second-quarter 2019 results on Jul 30, after the market closes.

Last reported quarter, the company delivered a positive earnings surprise of 2.6%. The bottom line also improved year over year. Though total revenues increased year over year, the same fell short of the Zacks Consensus Estimate. Revenues were affected by unfavorable pricing across most transportation service lines.

Let’s see, how things shape up for this earnings season.

Factors at Play

High operating expenses, mainly due to rise in personnel costs among others might affect the company’s second-quarter earnings as has been the case over the past few weeks. Increasing capital expenditures are also likely to put pressure on the company’s bottom line.

However, the company’s buyout of The Space Cargo Group in March is anticipated to boost results in the second quarter. The Space Cargo Group is part of the company’s growing Global Forwarding unit. Rapid e-commerce growth is the key catalyst behind the unit’s progress.

Owing to this tailwind, the Global Forwarding unit is expected to show an impressive performance in the to-be-reported quarter. Notably, the Zacks Consensus Estimate for gross revenues at the Global Forwarding segment stands at $616 million, higher than $538 million reported in the first quarter.

Additionally, the same for the North American Surface Transportation (NAST) segment is pegged at $2,983 million, above $2,797 million reported in the first quarter of 2019. With NAST revenues accounting for majority of the top line, the higher revenues should drive the company’s overall results.

C.H. Robinson Worldwide, Inc. Price and EPS Surprise


C.H. Robinson Worldwide, Inc. Price and EPS Surprise

C.H. Robinson Worldwide, Inc. price-eps-surprise | C.H. Robinson Worldwide, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that C.H. Robinson is likely to beat estimates in the soon-to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.

Earnings ESP: C.H. Robinson has an Earnings ESP of -0.36%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: C.H. Robinson carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company needs a positive ESP as well to be confident about a positive earnings surprise. Hence, this combination leaves surprise prediction inconclusive.

Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Transportation sector may consider American Airlines Group AAL, Golar LNG Limited GLNG and Copa Holdings CPA as these stocks possess the right mix of elements to beat on earnings this reporting cycle.

American Airlines has an Earnings ESP of +0.85% and a Zacks Rank of 3. The company will report second-quarter 2019 results on Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Golar LNG has an Earnings ESP of +5.91% and is a Zacks #3 Ranked player. This company is scheduled to announce second-quarter 2019 financial figures on Aug 22.

Copa Holdings sporting a Zacks Rank of 1 has an Earnings ESP of +2.15%. The company will announce second-quarter results on Aug 7.

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