Can C.H. Robinson (CHRW) Pull A Surprise In Q3 Earnings?

C.H. Robinson Worldwide (NASDAQ:CHRW) is set to release third-quarter 2016 financial results after the market closes on Oct 25.

Last quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Notably, the company’s earnings surpassed estimates in three of the last four quarters, with an average beat of 1.71%. Let’s see how things are shaping up for this announcement.

Factors at Play

C.H Robinson’s top line is expected to benefit from the rise in demand from third-party logistics providers (3PL). Given that the company is one of the best-rated 3PL service providers with a strong focus on expansion with its go-to-market strategies, it is naturally poised for growth.

We are also positive on the company’s acquisition strategy and resulting synergies. In September, the company completed the acquisition of Melbourne, Australia-based APC Logistics.

However, a challenging truck market is expected to hurt top-line growth. A rise in expenses in the Less-than Truckload segment may have an adverse impact on earnings. We are also concerned with the company’s high debt levels. Moreover, the company faces competition on various fronts from peers like Matson Inc. (NYSE:MATX) and Green Plains Partners LP (NASDAQ:GPP) .

Earnings Whispers

Our proven model does not conclusively show that C.H. Robinson is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:The Most Accurate estimate stands at 95 cents, while the Zacks Consensus Estimate is pegged at 97 cents. Hence, the Earnings ESP is -2.06%.

Zacks Rank:C.H. Robinson carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Please note that we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement.

Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Navios Maritime Holdings Inc. (NYSE:NM) , with an earnings ESP of +15.39% and a Zacks Rank #2. The company is expected to report third-quarter earnings on Nov 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

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