CH Robinson Worldwide Inc. (NASD: CHRW)

Transcription

1 Sep 08, 2016 CH Robinson Worldwide Inc. (NASD: CHRW) $70.22 USD ( As of 09/07/16 ) Zacks Rank 3-Hold Style:Value: Growth: Momentum: VGM: Data Overview 52 Week High-Low $ $ Day Average Volume 1,158,505 Beta 0. Market Cap B Dividend / Div Yld $1.72 / 2.45% Industry TRANS-SERVICES Industry Rank 74 / 265 (Top 28%) Current Ratio 1.26 Debt/Capital 28.36% Net Margin 4.06% Price/Book (P/B) 7.95 Price/Cash Flow (P/CF) Summary C.H. Robinson continues to impress with its growth and market expansion strategy through noteworthy acquisitions. The company recently announced plans to acquire APC Logistics, a company based in Australia, which provides freight forwarding and brokerage services. The deal, worth approximately AUD 0 million (approx $225 million),will expand the company's network substantially on closure. The steady demand for third-party logistics providers is encouraging. However, we remain concerned about the slow economic growth in certain regions in addition to adverse foreign exchange movements. The company's high debt levels also concern us. Nevertheless, the company s shareholder returns policy and focus on increasing market share remains commendable. Elements of the Zacks Rank Agreement Estimate Revisions ( days) Earnings Yield 5.28% Debt/Equity % 83% 77% 82% Value Score P/E (F1) P/E (F1) Rel to Industry 1.64 Q1 (Current Qtr) Revisions: 11 Up: 1 Down: 10 Q2 (Next Qtr) Revisions: 12 Up: 2 Down: 10 F1 (Current Year) Revisions: 13 Up: 3 Down: 10 F2 (Next Year) Revisions: 11 Up: 2 Down: 9 PEG Ratio 1.93 P/S (F1) 0.77 P/S (TTM) 0.77 Magnitude Consensus Estimate Trend ( days) P/CFO P/CFO Rel to Industry EV/EDITDA Annual Growth Score Proj. EPS Growth (F1/F0) 6.16% Q1-3.96% Q2-3.19% F1-1.85% F2-2.74% Hist. EPS Growth (Q0/Q-1) 1.66 Qtr CFO Growth Upside Zacks Consensus Estimate vs. Most Accurate Estimate 2 Yr CFO Growth Return on Equity (ROE) 43.86% (NI - CFO) / Total Assets Asset Turnover 3.88 Most Accurate: 0.96 Zacks Consensus: 0.97 Most Accurate: 0.95 Zacks Consensus: 0.91 Most Accurate: 3.75 Zacks Consensus: 3.71 Most Accurate: 3.97 Zacks Consensus: 3.91 Momentum Score Q1-1.03% Q2 4.40% F1 1.08% F2 1.54% 1 week Volume change 9.22% 1 week Price Cng Rel to Industry -2.07% Surprise Reported Earnings History (F1) EPS Est 1 week change 0.00% (F1) EPS Est 4 week change -0.24% (F1) EPS Est 12 week change -2.03% (Q1) EPS Est 1 week change 0.00% Reported: 1.00 Estimate: 1.00 Reported: 0.83 Estimate: 0.81 Reported: 0.88 Estimate: 0.87 Reported: 0.96 Estimate: 0.93 Average 4 Qtr Surprise Q End 06/16 Q End 03/16 Q End 12/15 Q End 09/ Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 10 Chicago, IL 6

2 The data on the front page and all the charts in the report represent market data as of 09/07/16, while the reports text is as of 09/08/2016 Overview Based in Minnesota, C.H. Robinson Worldwide Inc. is a thirdparty logistics company. As a non-asset based transportation provider, C.H. Robinson provides freight transportation services and logistic solutions to companies across a range of industries. C.H. Robinson operates primarily in the following segments: Transportation (accounted for 89% of 2015 revenues) provides multi-modal transportation solution including truck, intermodal, ocean, air and other value added logistics services ranging from supply chain management, freight consolidation, outsourced transportation, transportation management and information reporting. Sourcing (11%) deals in the business of sourcing fresh produce. The customers include large multi-store grocery retailers, restaurant chains and foodservice providers. There are various national and regional branded produce programs, including both proprietary brands (The Fresh 1, Fresh n Easy, Our World Organics, Tropic Sweet, Tomorrow s, Organics, and Kensington Farms) and licensed brands (Mott s, Tropicana, Welch s, and Bambino). Zacks Equity Research: CHRW Page 2 of 7

3 Reasons To Buy: C.H. Robinson is considered to be among the first-in-class third-party logistics (3PL) companies given its consistent growth rate in the past few years. The company will execute its go-to-market strategies with its current resources and will expand the business through the investments made in the last couple of years. We believe that the demand of 3PL services is rapidly growing as shippers seek cost effective one-stop solutions for their freight forwarding requirements. Management intends to gain market We are positive on the company's acquisition strategy and shareholder return policy. share on the back of investments made in technology and the current resources available. We expect the growing demand for customs brokerage and transportation management services to help the company grow beyond its core offering of truck brokerage. We are impressed by the company s efforts to reward shareholders through dividends and share buy backs. In Dec 2015, the board of directors of the company approved an 13.15% hike in its quarterly cash dividend, raising the figure to $0.43 per share. The company recently announced plans to acquire Melbourne, Australia based company APC Logistics for around AUD 0 million (approx $225 million). The deal is subject to customary closing conditions. Once approved, it will boost C.H. Robinson s presence in Asia. APC Logistics is a well known name in the freight industry and provides freight forwarding and brokerage services. It has commendable customer and carrier relationships which will be beneficial for C.H. Robinson. The latest acquisition plan is in line with the company s continued efforts to expand globally through mergers. It acquired internet-based freight broking enterprise, Freightquote.com in Jan 2015 and also acquired two logistics service providers, namely, Phoenix International and Poland-based freight forwarder Apreo Logistics S.A over the last three years. The company s strategy is expected to boost future growth. Reasons To Sell: C.H. Robinson s top line missed the Zacks Consensus Estimate in the second quarter as was the case in the first quarter when the company reported lower-than-expected revenues. Intermodal revenues declined significantly by 21.8% in the second quarter. Continuous below-par performances of the top line will hurt the stock significantly High debt levels, low intermodal increasing revenues expenses and are concerning. The Truckload business remains highly challenged given the uncertainties surrounding its market. The current trend of road freight conversion to rail intermodal may impede the trucking business. Moreover, in the event of a rise in expenses in the Less-than Truckload (LTL) space, the bottom-line stands to be adversely impacted. Following the U.K. vote to leave the European Union, the entire logistics space has been thrown into uncertainty. Although clarity regarding the extent of impact is awaited, we believe that C.H. Robinson, which is active on the acquisition front, might not pursue any acquisition in the UK before we get a clearer picture on Brexit s impact on logistics operators. We remain concerned about the company s high debt levels. The company exited the second quarter of 2016 with a only $207.1 million of cash and $500 million of long-term debt. Last Earnings Report C.H. Robinson Q2 Earnings in Line, Revenues Miss C.H. Robinson Worldwide Inc. posted second-quarter 2016 earnings per share of $1, in line with the Zacks Consensus Estimate. Earnings improved 6.4% year over year. On the other hand, total revenue decreased 6.9% year over year to $3,0 million and also fell short of the Zacks Consensus Estimate of $3,445 million. Total operating expenses climbed 1.6% year over year to $3.5 million, resulting in an operating ratio (operating expenses as a percentage of net revenue) of.7%, as against.8% a year ago. Quarter Ending 06/2016 Report Date Jul 26, 2016 Sales Surprise -4.22% EPS Surprise 0.00% Quarterly EPS 1.00 Annual EPS (TTM) 3.67 Segment Details Transportation: The segment (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $556.5 million in the second quarter of 2016, up 1.5% from the year-ago quarter. Truckload net revenue declined 1.4% year over year to $329.7 million. Meanwhile, net revenue at Less-than-Truckload increased 9% year over year to $99.8 million. Net revenue at the Intermodal segment plunged 21.8% year over year to $9 million, hurt by the conversion to Truckload from Intermodal. Net revenue at the Ocean transportation segment increased 1.7% year over year to $.1 million. The same at the Air transportation division increased 2.7% year over year to $20.1 million. Meanwhile, Customs net revenue improved 5.8% to $11.6 million. Net revenue at Other logistics services jumped 24% year over year to $26.2 million on the back of growth in managed services. Sourcing: Net revenue at the segment increased 5.7% year over year to $37.7 million. Liquidity Zacks Equity Research: CHRW Page 3 of 7

4 C.H. Robinson exited the second quarter of 2016 with cash and cash equivalents of approximately $207.1 million compared with $168.3 million at the end of Long-term debt was $500 million at the end of the quarter under review, unchanged from the figure recorded at the end of Recent News C.H. Robisnon to buy APC Logistics - Aug 31, 2016 C.H. Robison annoucned its intention to acquire Australia based APC Logistics in a deal valued at around AUD 0 million (approx $225 million). The deal, on closure, will signifificantly expand the company's global network. Dividend update -May 12, 2016 C.H. Robinson's board has approved the decision to pay quarterly cash dividend of $0.43 per share. The move reflects the company s intention of utilizing free cash to enhance shareholders returns, in turn, boosting their confidence in the stock. A look at past records reveals C.H. Robinson s stable dividend payment history. The company has paid dividends for more than 25 years now. Zacks Equity Research: CHRW Page 4 of 7

5 Industry Analysis Zacks Industry Rank: 74 / 265 (Top 28%) Top Peers GRUPO AEROP-ADR (ASR) DYNAGAS LNG PTR (DLNG) DEUTSCHE PST AG (DPSGY) EXPEDITORS INTL (EXPD) GREEN PLAIN PTR (GPP) HERTZ GLBL HLDG (HTZ) HUB GROUP INC-A (HUBG) KUEHNE&NAGL INT (KHNGY) MATSON INC (MATX) Industry Comparison Trans-services Position in Industry: 4 of 16 Industry Peers CHRW Market Cap B # of Analysts 18 Dividend Yield 2.23% Growth Score Hist. EPS Growth (3-5 yrs) 6.16% Proj. EPS Growth (F1/F0) 5.58% Curr. Cash Flow Growth 13.69% Hist. Cash Flow Growth (3-5 yrs) 6.71% Current Ratio 1.26 Debt/Capital 28.36% Net Margin 4.06% Return on Equity 43.86% Sales/Assets 3.88 Proj. Sales Growth (F1/F0) -3.84% Value Score Cash/Price EV/EBITDA PEG Ratio 1.93 Price/Book (P/B) 7.95 Price/Cash Flow (P/CF) P/E (F1) Price/Sales (P/S) 0.77 Earnings Yield 5.28% Debt/Equity 0.40 Cash Flow ($/share) 4.01 Momentum Score Daily Price Chg -1.42% 1 Week Price Chg -2.07% 4 Week Price Chg 2.02% 12 Week Price Chg -2.98% 52 Week Price Chg 1.99% 20 Day Average Volume 1,154,193 (F1) EPS Est Wkly Chg 0.00% (F1) EPS Est Mthly Chg -0.24% (F1) EPS Est Qtrly Chg -2.03% (Q1) EPS Est Mthly Chg -0.40% X Industry S&P B B % 1.74% % 7.35% 8.89% 7.26% 10.59% 4.41% 9.51% 8.08% % 42.01% 4.24% 9.56% 12.56% 15.90% % 2.69% % 5.23% % 0.14% -0.57% 0.01% 2.16% 0.37% 13.87% 4.98% 9.29% 10.47% 64, % 0.00% 0.00% -0.01% 1.89% 0.88% 0.00% 0.00% ASR DLNG DPSGY 4.42 B 5.93 M B % 8.82% 2.88% NA % 12.00% 6.93% % 9.57%.65% 1.87% 10.02% 66.67% 14.88% 21.87% % 9.58% NA NA % 65.51% 34.96% 34.33% 40.76% 3.25% 13.19% 11.34% 13.05% % 16.56% -2.56% 1.13% 0.67% 0.82% -0.52% 0.80% -0.97% 2.37% 1.57% 3.92% 5.81% 12.% 15.13% 8.61% 2.26% 18.67% 34,051 72,771 56, % 0.00% 0.89% 1.46% 0.00% 0.89% -1.88% 1.89% -2.01% 0.87% 0.00% 0.00% Zacks Equity Research: CHRW Page 5 of 7

6 Zacks Rank Education The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise. Agreement This is the extent which brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of estimates being revised higher, the better the score for this component. For example, if there were 10 estimate revisions over the last days, with 8 of those revisions up, and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the percentage of agreement the better. Magnitude This is a measure based on the size of the recent change in the current consensus estimates. The Zacks Rank looks at the magnitude of these changes over the last days. In the chart to the right, the display shows the consensus estimate from -days ago, -days ago, 7-days ago, and the most current estimate The difference between the current estimate and the estimate from -days ago is displayed as a percentage. A larger positive percentage increase will score better on this component. Upside This is the difference between the most accurate estimate, as calculated by Zacks, and the consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most accurate estimate of $1.05 will have an upside factor of 5%. This is not an indication of how much a stock will go up or down. Instead, it's a measure of the difference between these two estimates. This is particularly useful near earnings season as a positive upside percentage can be used to help predict a future surprise. Surprise The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have positively surprised in the recent past have a tendency of positively surprising again in the future (or missing if they recently missed). A stock with a recent track record of positive surprises will score better on this factor than a stock with a history of negative surprises. These stocks will have a greater likelihood of positively surprising again. Zacks Style Score Education The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to focus on the best Zacks Rank stocks that best fit their own stock picking preferences. Academic research has proven that stocks with the best Growth, Value, and Momentum characteristics outperform the market. The Zacks Style Scores rate stocks on each of these individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than a C; and so on. Value Score Growth Score Momentum Score VGM Score As an investor, you want to buy stocks with the highest probability of success. That means buying stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B. Zacks Equity Research: CHRW Page 6 of 7

7 Disclosures The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market. Zacks Equity Research: CHRW Page 7 of 7