Last week, you might have seen that C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) released its yearly result to the market. The early response was not positive, with shares down 9.0% to US$72.64 in the past week. It looks like the results were a bit of a negative overall. While revenues of US$15b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.9% to hit US$4.19 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We’ve gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following last week’s earnings report, C.H. Robinson Worldwide’s 18 analysts are forecasting 2020 revenues to be US$15.3b, approximately in line with the last 12 months. Statutory earnings per share are expected to fall 14% to US$3.61 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$15.5b and earnings per share (EPS) of US$4.37 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target fell 5.5% to US$78.10, with analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on C.H. Robinson Worldwide, with the most bullish analyst valuing it at US$95.00 and the most bearish at US$57.00 per share. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can also be useful to step back and take a broader view of how analyst forecasts compare to C.H. Robinson Worldwide’s performance in recent years. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.2% a significant reduction from annual growth of 4.8% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 6.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect C.H. Robinson Worldwide to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for C.H. Robinson Worldwide. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for C.H. Robinson Worldwide going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether C.H. Robinson Worldwide’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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