C.H. Robinson Worldwide Inc. (CHRW) is set to release its fourth-quarter 2013 results before the market opens on Feb 5, 2014.
In the last quarter, the company delivered a negative 5.48% earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
We believe C.H. Robinson’s asset-light model with diversified freight forwarding solutions provide earnings flexibility in an economic downturn. The company’s near-term growth is expected to be driven by synergies from its acquisitions, expansion of the U.S. truckload brokerage, penetration in the less-than-truckload and intermodal markets, and expansion of Transportation Management Center offerings. However, factors like a competitive freight market, declining truckload market share and limited margin expansion opportunities could restrict near-term growth.
Earnings Whispers
Our proven model conclusively shows that C.H. Robinson is likely to miss the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as elaborated below.
Zacks ESP: This is because the Most Accurate estimate is at 69 cents while the Zacks Consensus Estimate is at 68 cents. This leads to an ESP of +1.47% for C.H. Robinson.
Zacks Rank: C.H. Robinson’s Zacks Rank #4 (Sell) decreases the predictive power of ESP.
We caution investors against the stock as a Zacks Earnings ESP of +1.47% combined with a Zacks Rank #4 lowers the possibility of an earnings surprise. Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Other Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.
Trinity Industries Inc. (TRN) with Earnings ESP of +2.13% and a Zacks Rank #1.
American Railcar Industries Inc. (ARII) with Earnings ESP of +1.01% and a Zacks Rank #2.
XPO Logistics, Inc. (XPO) with Earnings ESP of +10.35% and a Zacks Rank #3.
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