CH Robinson Worldwide Inc.
) is slated to report its second-quarter 2014 financial results on
Jul 29, after the market closes. In the last reported quarter, the
company had delivered a 1.61% positive earnings surprise. Let's see
how things are shaping up prior to this announcement.
Factors at Play this Quarter
CH Robinson is rated as one among the first-in-class third-party
logistics (3PL) companies given its consistent growth rate over the
past few years. The company will execute its go-to-market
strategies with its current resources and will expand its 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. Given the company's advanced technology
and service capabilities, we believe it is poised to capture a
significant share in the current freight transportation market. We
expect the growing demand for customs brokerage and transportation
management services to help the company grow beyond its core
offering of truck brokerage.
However, we foresee increased competition in the truckload
market owing to the rising numbers of third-party freight carriers.
CH Robinson considers that its market share of 2% to 3% in the
truckload industry may not be sufficient to sustain revenue growth
in this sector. However, the volatile nature of the truckload
market makes it difficult for the company to provide future
expectations. Further, increased competition will also make it
difficult to sustain current market share, leading to significant
headwinds for future growth. The company does not own or control
the transportation assets that deliver customers' freight. CH
Robinson depends on independent third parties to provide truck,
rail, ocean, and air services. If the company is unable to secure
sufficient equipment or other transportation services to meet
customer commitments, they could switch to competitors temporarily
or permanently, affecting the company's profits.
Our proven model indicates that CH Robinson is likely to beat
earnings this quarter.This is because a stock needs to have both a
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to
happen. Since the company fulfils both these parameters as
demonstrated below, we are confident of a positive earnings
surprise at the company this season.
Positive Zacks ESP:
Earnings ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, stands at
+2.60% for CH Robinson.
CH Robinson carries a Zacks Rank #2, which further increases the
predictive power of ESP.
Other Stocks to Consider
Here are some companies to consider as our model shows these
have the right combination of elements to post an earnings beat
ArcBest Corporation (
) with earnings ESP of +5.56% and a Zacks Rank #2.
Expeditors International of Washington Inc. (
) with earnings ESP of +4.26% and a Zacks Rank #2.
Con-way Inc. (
) with earnings ESP of +2.67% and a Zacks Rank #2.
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