C.H. Robinson Worldwide, Inc. (CHRW) has been benefiting from its consistent shareholder-friendly initiatives, cost-cutting measures and efforts to improve productivity and efficiency to mitigate high expenses and a weaker-than-expected demand scenario.
The positive sentiment surrounding CHRW stock is evident from the fact that the Zacks Consensus Estimate for the fourth quarter of 2024 and full-year 2024 earnings has been revised upward in the past 90 days.
Image Source: Zacks Investment Research
Let’s delve deeper.
Solid Financial Returns for Shareholders
CHRW has been making uninterrupted dividend payments for more than 25 years. Highlighting its pro-investor stance, C.H. Robinson'sboard of directors(on Aug. 8, 2024)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). This quarterly dividend of 62 cents ($2.48 annualized) per share gives C.H. Robinson a 2.39% yield at the current stock price. This company’s payout ratio is 65%, with a five-year dividend growth rate of 5.40%.
CHRW has been consistently making efforts to reward its shareholders through dividends and share buybacks, which are encouraging. During 2022, C.H. Robinson rewarded its shareholders through a combination of cash dividends ($285.32 million) and share repurchases ($1.459 billion). Continuing the shareholder-friendly approach, in 2023, CHRW repurchased shares worth $63.88 million and paid $291.56 million in cash dividends.
During the first nine months of 2024, CHRW returned $282.8 million of cash to shareholders, including $218.9 million in the form of cash dividends and $63.9 million through share repurchases. Such shareholder-friendly moves instil investor confidence and positively impacts the company’s bottom line.
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.
Factors Working in Favor of CHRW Stock
The Zacks Consensus Estimate for CHRW’s fourth-quarter 2024 and first-quarter 2025 revenues is pegged at $4.48 billion and $4.52 billion, which indicates a year-over-year improvement of 6.2% and 2.3%, respectively. The consensus mark for 2024 and 2025 revenues also reflect year-over-year growth of 2.4% and 2.5%, respectively. C.H. Robinson’s top line has been benefiting from higher pricing and volume in its ocean services.
CHRW remains focused on cost-cutting measures and improving productivity and efficiency to mitigate high expenses and a weaker-than-expected demand scenario. Personnel expenses decreased 0.2% to $1.1 billion during the first nine months of 2024, due to cost optimization efforts partially offset by higher variable compensation. Low costs on purchased transportation and related services have also resulted in declining operating costs. A decrease in expenses bodes well for the company’s bottom-line results.
From a valuation perspective, CHRW is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio.
Image Source: Zacks Investment Research
CHRW’s Price Performance Soars High
C.H. Robinson has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 10.29%. Driven by this upbeat earnings performance and the positives mentioned above, shares of CHRW have gained 19.2% in the past six months, outperforming its industry as well as the S&P 500, of which the company is a key member.
This year, CHRW’s price performance compares favorably with that of other industry players like Matson, Inc. (MATX) and Expeditors International of Washington, Inc. (EXPD).
Six-Month Price Performance
Image Source: Zacks Investment Research
Wrapping Up
Given the positives surrounding the CHRW stock, as highlighted throughout the write-up, we believe that investors should add CHRW stock to their portfolios for healthy returns. The Zacks Rank #2 (Buy) carried by the stock supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
