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C.H. Robinson (CHRW) Q2 Earnings: Disappointment in Store?


C.H. Robinson Worldwide Inc. CHRW is slated to release second-quarter 2017 results on Jul 19, after the market closes.

Last quarter, the company delivered positive earnings surprise of 7.50%. Its earnings per share of 86 cents beat the Zacks Consensus Estimate of 80 cents. Also, earnings increased 3.61% year over year. Total revenue rose 11.10% year over year to $3415.1 million and beat the Zacks Consensus Estimate of $3328.2 million.

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

Factors at Play

The company’s slow economic growth in certain key markets in addition to adverse foreign exchange movements are matters of great concern. Its high debt levels also pose a serious challenge. Apart from the above mentioned headwinds, high costs are also likely to hurt the bottom line in the second quarter.

Due to the headwinds stated above, shares of the company have underperformed the Zacks categorized Transportation-Services industry in the last one month. The stock has lost 0.91% compared with the industry’s gain of 4.14%.

However the company’s efforts to reward shareholders are remarkable. In May 2017, the company’s board declared a regular quarterly cash dividend of 45 cents per share. Its expansion efforts also raise optimism. C.H. Robinson’s presence in the Australia New Zealand region has been boosted by the company’s acquisition of APC Logistics in Aug 2016.

Earnings Whispers

Our proven model does not conclusively show that C.H. Robinson will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen.

Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for C.H. Robinsonis -1.11% as the Most Accurate estimate is pegged at 89 cents, while the Zacks Consensus Estimate is pegged at 90 cents. In order to be confident about an earnings surprise, we always need to have a positive ESP. 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 #4 (Sell), which, in turn, lowers the predictive power of ESP.

Please note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered for going into an earnings announcement.

Stocks to Consider

Investors interested in the broader transportation sector may consider stocks like American Airlines Group, Inc. AAL, Allegiant Travel Company ALGT and Alaska Air Group, Inc. ALK, as our model shows that these stocks possess the right combination of elements to post an earnings beat in their next release.

American Airlines has an Earnings ESP of +2.75% and a Zacks Rank #1. The company will release its second-quarter results on Jul 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allegiant Travel has an Earnings ESP of +1.36% and a Zacks Rank #2. The company will release its second-quarter results on Jul 26.

Alaska Air Group has an Earnings ESP of +0.80% and a Zacks Rank #2. The company will announce its second-quarter results on Jul 26.

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