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C.H. Robinson Up 13% in a Month: What Awaits CHRW Investors?
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Shares of Minnesota-based transportation heavyweight C.H. Robinson Worldwide (CHRW - Free Report) have had a good time on the bourses of late, gaining 12.9% over the past 30 days, in contrast to its industry’s 4.7% decline. CHRW also outperformed the S&P 500, of which it is a key member.
One-Month Price Comparison
Image Source: Zacks Investment Research
In fact, CHRW touched its 52-week high of $105.41 on Aug 1, 2024. Currently, CHRW shares are trading at a 6.3% discount to its 52-week high. Technical indicators suggest continued strong performance for CHRW. The stock trades above its 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in CHRW’s financial health and prospects.
50-Day Moving Average
Image Source: Zacks Investment Research
In view of this impressive price performance, the question that naturally arises is whether CHRW’s impressive rally has legs or whether investors should book profits now. Before that, let's delve deeper to unearth the reasons behind this northward price movement.
Dividend Increase
On Aug 8, C.H. Robinson’s board of directors approved a dividend hike of 1.6%, thereby raising its quarterly cash dividend to 62 cents per share ($2.48 annualized) from 61 cents ($2.44 annualized). The raised dividend will be paid out on Oct 1, 2024, to shareholders of record at the close of business on Sep 6. The move reflects CHRW’s intention to utilize free cash to enhance its shareholders’ returns.
Notably, CHRW has been making uninterrupted dividend payments for more than 25 years. During 2023, CHRW paid $291.56 million in cash dividends. During the first half of 2024, CHRW paid cash dividends worth $147.3 million. (Check CHRW’s dividend history here).
Dividend-paying stocks provide a solid income stream and have fewer chances of experiencing wild price swings. Dividend stocks, like CHRW, are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty like the current scenario.
Management’s decision to increase its quarterly dividend payout reflects the company’s financial well-being and its commitment to boosting shareholder value. The freight broker is also active on the share repurchase front.
CHRW is not the only player from the Zacks Transportation sector to have hiked quarterly dividends in 2024. In June, FedEx’s (FDX - Free Report) board of directors approved a dividend hike of 10%, thereby raising its quarterly cash dividend to $1.38 ($5.52 annualized). Also in June, Delta Air Lines’ (DAL - Free Report) management announced a 50% hike in its quarterly dividend payout to 15 cents per share (annualized 60 cents per share) from the previous payout of 10 cents per share (annualized 40 cents per share).
Earning Beat in Q2
C.H. Robinson reported second-quarter 2024 earnings of $1.15 per share, which surpassed the Zacks Consensus Estimate of 95 cents and improved 27.7% year over year. The bottom line was aided by the implementation of a new, cost-efficient operating model. The cost-reduction efforts clearly outweighed the ongoing freight downturn.
Driven by the company’s cost-cut efforts, operating expenses decreased 4.4% year over year to $509.3 million in the June quarter. Total revenues of $4.483 billion missed the Zacks Consensus Estimate but improved 1.4% year over year owing to higher pricing in the company’s ocean services.
C.H. Robinson's president and chief executive officer, Dave Bozeman, stated, "Our second quarter results reflect a higher quality of execution and performance, as we continue to implement the new Robinson operating model. And although we continue to fight through an elongated freight recession, we are winning and executing better at this point in the cycle.”
Owing to the abovementioned tailwinds, earnings estimates have been northbound, as shown below.
Image Source: Zacks Investment Research
The company’s long-term (3-5 years) earnings growth rate is an impressive 12%, higher than its industry’s 11.8%.
CHRW Trading at a Discount
From a valuation perspective, CHRW is trading relatively cheaply. CHRW is currently trading at a forward sales multiple of 0.63, at a discount compared to the broader industry. The current value is near its median over the last five years.
Image Source: Zacks Investment Research
To Sum Up
The earnings beat achieved in the second quarter, despite the freight downturn, underscores the effectiveness of the company's pricing strategies and cost-saving measures. CHRW’s recent dividend hike highlights its financial strength. The fact that CHRW is attractively valued adds to the list of tailwinds.
Thus, we believe investors should add CHRW stock to their portfolios for healthy returns. Its current Zacks Rank #1 (Strong Buy) supports our thesis. You can see the complete list of today’s Zacks #1 Rank stocks here.
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C.H. Robinson Up 13% in a Month: What Awaits CHRW Investors?
Shares of Minnesota-based transportation heavyweight C.H. Robinson Worldwide (CHRW - Free Report) have had a good time on the bourses of late, gaining 12.9% over the past 30 days, in contrast to its industry’s 4.7% decline. CHRW also outperformed the S&P 500, of which it is a key member.
One-Month Price Comparison
In fact, CHRW touched its 52-week high of $105.41 on Aug 1, 2024. Currently, CHRW shares are trading at a 6.3% discount to its 52-week high. Technical indicators suggest continued strong performance for CHRW. The stock trades above its 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in CHRW’s financial health and prospects.
50-Day Moving Average
Image Source: Zacks Investment Research
In view of this impressive price performance, the question that naturally arises is whether CHRW’s impressive rally has legs or whether investors should book profits now. Before that, let's delve deeper to unearth the reasons behind this northward price movement.
Dividend Increase
On Aug 8, C.H. Robinson’s board of directors approved a dividend hike of 1.6%, thereby raising its quarterly cash dividend to 62 cents per share ($2.48 annualized) from 61 cents ($2.44 annualized). The raised dividend will be paid out on Oct 1, 2024, to shareholders of record at the close of business on Sep 6. The move reflects CHRW’s intention to utilize free cash to enhance its shareholders’ returns.
Notably, CHRW has been making uninterrupted dividend payments for more than 25 years. During 2023, CHRW paid $291.56 million in cash dividends. During the first half of 2024, CHRW paid cash dividends worth $147.3 million. (Check CHRW’s dividend history here).
Dividend-paying stocks provide a solid income stream and have fewer chances of experiencing wild price swings. Dividend stocks, like CHRW, are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty like the current scenario.
Management’s decision to increase its quarterly dividend payout reflects the company’s financial well-being and its commitment to boosting shareholder value. The freight broker is also active on the share repurchase front.
CHRW is not the only player from the Zacks Transportation sector to have hiked quarterly dividends in 2024. In June, FedEx’s (FDX - Free Report) board of directors approved a dividend hike of 10%, thereby raising its quarterly cash dividend to $1.38 ($5.52 annualized). Also in June, Delta Air Lines’ (DAL - Free Report) management announced a 50% hike in its quarterly dividend payout to 15 cents per share (annualized 60 cents per share) from the previous payout of 10 cents per share (annualized 40 cents per share).
Earning Beat in Q2
C.H. Robinson reported second-quarter 2024 earnings of $1.15 per share, which surpassed the Zacks Consensus Estimate of 95 cents and improved 27.7% year over year. The bottom line was aided by the implementation of a new, cost-efficient operating model. The cost-reduction efforts clearly outweighed the ongoing freight downturn.
Driven by the company’s cost-cut efforts, operating expenses decreased 4.4% year over year to $509.3 million in the June quarter. Total revenues of $4.483 billion missed the Zacks Consensus Estimate but improved 1.4% year over year owing to higher pricing in the company’s ocean services.
C.H. Robinson's president and chief executive officer, Dave Bozeman, stated, "Our second quarter results reflect a higher quality of execution and performance, as we continue to implement the new Robinson operating model. And although we continue to fight through an elongated freight recession, we are winning and executing better at this point in the cycle.”
Owing to the abovementioned tailwinds, earnings estimates have been northbound, as shown below.
The company’s long-term (3-5 years) earnings growth rate is an impressive 12%, higher than its industry’s 11.8%.
CHRW Trading at a Discount
From a valuation perspective, CHRW is trading relatively cheaply. CHRW is currently trading at a forward sales multiple of 0.63, at a discount compared to the broader industry. The current value is near its median over the last five years.
To Sum Up
The earnings beat achieved in the second quarter, despite the freight downturn, underscores the effectiveness of the company's pricing strategies and cost-saving measures. CHRW’s recent dividend hike highlights its financial strength. The fact that CHRW is attractively valued adds to the list of tailwinds.
Thus, we believe investors should add CHRW stock to their portfolios for healthy returns. Its current Zacks Rank #1 (Strong Buy) supports our thesis. You can see the complete list of today’s Zacks #1 Rank stocks here.