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Why Is C.H. Robinson (CHRW) Up 12.5% Since Last Earnings Report?

A month has gone by since the last earnings report for C.H. Robinson Worldwide (CHRW). Shares have added about 12.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is C.H. Robinson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Earnings Miss at C.H. Robinson in Q1

C.H. Robinson's earnings of 57 cents per share missed the Zacks Consensus Estimate of 71 cents. The bottom line also plunged 50.9% year over year.

However, total revenues of $3,805 million surpassed the Zacks Consensus Estimate of $3554.7 million and also increased 1.4% year over year. This upside was led by higher truckload and less than truckload (LTL) volumes.

Total operating expenses inched up 0.9% year over year to $458.51 million, primarily due to a 12.4% increase in selling, general and administrative expenses. Consequently, operating ratio (operating expenses as a percentage of net revenues) deteriorated to 80.7% from 66.9% in the year-ago quarter. With respect to this metric, the lower the value, the better.

The company returned $152.2 million to shareholders through a combination of cash dividends ($69.9 million) and share repurchases ($82.4 million). Capital expenditures totaled $14.7 million in the quarter under review. Full-year capital expenses are expected in the range of $60-$70 million, with the maximum reserved for technology spends.

Segmental Results

At North American Surface Transportation (NAST), total revenues were $2,823.75 million (up 1%) in the first quarter. However, net revenues at the segment dropped 23.4% despite the Prime Distribution Services acquisition contributing 1 percentage point to segmental results. NAST results include Robinson Fresh transportation, which was previously reported under a separate segment.

Total revenues at Global Forwarding summed $530.38 million, down 1.3% year over year. Contraction in volumes at the ocean and air units affected results. Meanwhile, net revenues at the segment climbed 0.8% with The Space Cargo Group acquisition boosting results by 2 percentage points.

A historical presentation of the results on an enterprise basis is given below:

Transportation: The unit (comprising Truckload, Intermodal, LTL, Ocean, Air, Customs and Other logistics services) delivered net revenues of $542 million in the quarter under consideration, down 16.8% from the prior-year figure.

Truckload net revenues declined 29.9% year over year to $264.93 million despite volumes increasing 7.5% year over year. LTL net revenues also dropped 2% year over year to $113.91 million. However, LTL volumes grew 7.5% in the quarter.

At the Intermodal segment, net revenues increased 24.3% year over year to $7.55 millionas volumes rose 8%.Net revenues at the Ocean transportation segment declined 2.3% year over year to $69.9 million. The same at the air transportation segment increased 2.7% to $28.34 million. Meanwhile, customs net revenues slid 3.1% to $21.19 million.

However, Other logistics services’ net revenues rose 19.1% to $36.18 million.

Sourcing: Net revenues at the segment slipped 4.3% to $25.95 million.

Liquidity

The company exited the first quarter with cash and cash equivalents of $294.57 million compared with $447.86 million at the end of 2019. Liquidity at the end of the quarter was more than $1.2 billion. Long-term debt was $1,092.66 million compared with $1,092.45 million at 2019-end.

Sourcing: Net revenue at the segment increased 3.9% year over year to $30.41 million.

Liquidity

Sourcing: Net revenue at the segment increased 3.9% year over year to $30.41 million.

Liquidity

Below we give a historical presentation of results on an enterprise basis.

Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.

Below we give a historical presentation of results on an enterprise basis.

Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.

Below we give a historical presentation of results on an enterprise basis.

Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -21.05% due to these changes.

VGM Scores

Currently, C.H. Robinson has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise C.H. Robinson has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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