C.H. Robinson Worldwide Inc.’s (NASDAQ:CHRW) third-quarter 2016 earnings per share of 90 cents fell short of the Zacks Consensus Estimate of 97 cents. Moreover, the bottom line deteriorated 6.25% year over year. The lackluster bottom-line performance disappointed investors, which led to stock price depreciation in the after-market trading session on Oct 25.
On the other hand, total revenue beat the Zacks Consensus Estimate of $3,328 million but dropped 1.8% year over year to $3,356 million. Results were hurt by the weak pricing environment.
Total operating expenses decreased 2.4% year over year to $347.2 million. This resulted in an operating ratio (operating expenses as a percentage of net revenue) of 62.2% as against 60.7% in the second quarter of 2016.
Segment Details
Transportation: The segment (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $528.6 million in the third quarter, down 5.6% year over year.
Truckload net revenue declined 10.4% from the year-ago quarter to $309.1 million. Net revenue at Less-than-Truckload inched up 2.4% year over year to $96.4 million. Net revenue at the Intermodal segment plunged 24.5% year over year to $7.7 million. The presence of alternative lower cost truck market hurt the company’s intermodal operations, which in turn, resulted in the underperformance of the entire transportation segment.
Net revenue at the Ocean transportation segment was down 3.1% year over year to $56.5 million. Air transportation division reported net revenue of $19.9 million, down 1.7% year over year to. Net revenue at the Customs segment improved 2.6% to $12.3 million.
Net revenue at Other logistics services jumped 21% year over year to $26.8 million on the back of growth in managed services.
Sourcing: Net revenue at the segment increased 4.7% year over year to $29.8 million.
Liquidity
C.H. Robinson exited the third quarter with cash and cash equivalents of approximately $224.5 million compared with $168.3 million at the end of 2015. Long-term debt remained unchanged from the 2015-end level of $500 million.
We note that C.H. Robinson is not the only transportation company to report lower-than-expected earnings in the third quarter. Sector participants like JetBlue Airways (NASDAQ:JBLU) and Canadian Pacific Railway Limited (NYSE:CP) have also underperformed with respect to the bottom-line in the third quarter.
Zacks Rank & a key pick
C.H. Robinson currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the transportation space is Copa Holdings (NYSE:CPA) , which sports a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For 2016, the Zacks Consensus Estimate for Copa Holdings has climbed 12 cents to $4.57 per share over the last two months.
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