Shares of C.H. Robinson Worldwide (CHRW) continue to set new all-time highs as concerns over a double-dip recession subside. As a leader in transportation and logistics solutions the company stands to benefit from the global economic recovery.
Revenue and earnings continue to climb and management remains optimistic that it can achieve its long-term growth targets over the next several years.
Solid Second Quarter
Total revenue grew 27.4% from the second quarter in 2009. Transportation revenue – which makes up 80% of total revenue – increased 32.0%. The growth was driven by higher volumes in each of its transportation modes and increased pricing to customers. Sourcing revenue grew 11.5%.
The operating margin did decline, however, from 7.8% to 6.4%. Higher transportation and fuel costs were the culprit.
Earnings per share came in at 59 cents, beating the Zacks Consensus Estimate by 4 cents. It was a 9.3% increase over the same quarter in 2009.
Outlook
Since going public in 1997, the company has set a long-term compound annual growth target of 15% for net revenues, income from operations, and earnings per share. While the company has not always met these metrics year-to-year, CHRW has exceeded them since 1997.
Management expects to achieve its goal of 15% growth in the future as well, primarily through organic growth, but also through acquisitions.
The Zacks Consensus Estimate for 2010 is $2.31, representing 8% annual EPS growth. The 2011 estimate is currently $2.69, corresponding to 17% growth.
Fundamentals
C.H. Robinson Worldwide carries no long-term debt and has relatively little capital expenditures. It produces plenty of free cash flow to fund growth, buy back shares, and pay a dividend. It has spent over $84 million year-to-date paying out dividends and over $89 million repurchasing stock.
The company has paid a dividend since 1985 and has increased it at a compound annual growth rate of 28.7% since 2000. It currently yields 1.4%.
The stock is not exactly cheap though, trading at 30.6x forward earnings. The industry average is 18.8x.
The stock also trades at 11.1x book value, well above the industry average of 1.3x. It return on equity is superior at 33.4%, compared with just 7.0% for the industry however.
C.H. Robinson Worldwide has a market cap of $11.7 billion. It is a Zacks #2 Rank (Buy) stock.
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