C.H. Robinson Inc. CHRW is set to release first-quarter 2015 results on April 27 after the market closes.
Last quarter, the company had delivered a positive earnings surprise of 1.32%. Let’s see how things are shaping up prior to this announcement.
Factors at play
We believe factors like a competitive freight market and a declining truckload market share will impact the to-be-reported quarterly results. The increasing cost of transportation is likely to adversely impact results at C.H. Robinson in the first quarter as the company struggles to pass on the higher transportation costs to customers. Furthermore, adverse foreign currency movements courtesy a strong dollar is another hurdle for the company that could hurt first quarter results. The weak balance sheet of the company also poses concern.
Despite these headwinds, C.H. Robinson has retained its position among the first-in-class 3PL companies, given its consistent growth rate over the past few years. The company plans to execute its go-to-market strategies with the resources available and expand business through investments made in the last couple of years. Notably, the demand for 3PL services is growing at a rapid pace as shippers seek cost effective one-stop solutions for their freight forwarding requirements. The company intends to gain market share through strategic investments made in technology and currently available resources.
Earnings Whispers
Our proven model does not conclusively show that C.H. Robinson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here, as elaborated below.
Zacks ESP: C.H. Robinson has an earnings ESP of 0.00%. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of 74 cents.
Zacks Rank: C.H. Robinson has a Zacks Rank #4 (Sell). Note that, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions. C.H. Robinson’s first-quarter 2015 earnings estimate has slipped by a penny to 74 cents over the last 30 days.
Stocks to Consider
Here are some companies in the transportation sector that investors may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Virgin America VA carries a Zacks Rank #3 and an earnings ESP of +7.14%. The company will report its first-quarter results on Apr 30, before the commencement of trading.
Global Ship Lease, Inc. GSL carries a Zacks Rank #2 and has an earnings ESP of +100%. The company is scheduled to report its first-quarter 2015 results on Apr 30.
Saia, Inc. SAIA carries a Zacks Rank #2 and has an earnings ESP of +4.08%. The company is scheduled to report its first-quarter 2015 results on Apr 29.
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