CHRW - Embedded Expectations Analysis - 2020 05 18
C.H. Robinson Worldwide, Inc. (CHRW:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.9x Uniform P/E. At these levels, the market has bearish expectations for the firm. Although management's concerns about SG&A and personnel costs, furloughs, and current market conditions suggest the potential for near-term headwinds, current market expectations are overly bearish, suggesting longer-term equity upside is likelySpecifically, management may be downplaying the recurring nature of SG&A for technology and purchase services and the duration of their implemented furloughs, and they may have concerns about market uncertainty and the currency conversion of working capital and cash balances. Moreover, they may be overstating their technology investments' ability to drive operational efficiency, their anticipated personnel and SG&A cost savings, and their ability to gain brokerage market share
Although management's concerns about costs, furloughs, and current market conditions suggest the potential for near-term headwinds, given the firm's robust business model and healthy credit profile, current market expectations appear too bearish and longer-term outperformance is likely warranted for CHRW
Robinson (C.H.) Worldwide is a third party logistics company. The company provides freight transportation services and logistics solutions to companies. The company's segments are: North American Surface Transportation, which provides freight transportation services across North America through a network of offices; and Global Forwarding, which provides global logistics services through an international network of offices and also contracts with independent agents; and All Other and Corporate, which includes Robinson Fresh? that provides sourcing services including the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items, and managed services that provides Managed TMS?.
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