C.H. Robinson stock drives higher on better-than-feared earnings print
THEPALMER/E+ via Getty Images
CH Robinson (NASDAQ:CHRW) stock bounced over 8% higher on Thursday despite missing expectations for Q1.
The trucking company met Q1 estimates on EPS but fell $200M short of revenue expectations amid a deceleration in the trucking industry. Adjusted operating margin decreased 14.60% year over year as well.
That said, Susquehanna indicated the company likely did enough to please the buy-side.
“CHRW topped our sense of buyside expectations, netting better than feared Forwarding profits (after a deep downside 4Q) vs. faster than expected cyclical deterioration in NAST,” equity analyst Bascome Majors told clients.
He added that a search for a new CEO could provide a catalyst in Q2. Bank of America analyst Ken Hoexter agreed on that front, noting that a CEO with strong operational expertise could serve to improve sentiment.
“Given softening freight market conditions, CHRW accelerated its cost cut moves as it now targets $300M in net operating cost savings by 4Q23 (from $150M prior). It expects to lower personnel expense by an additional $100M as it aims to further reduce headcount (16,406 in 1Q23, down 7% year-year) and noted its reductions are long-term structural moves,” he wrote. “In regard to CHRW’s CEO succession plans, interim CEO Scott Anderson noted that a new CEO is expected to be appointed in 2Q23. He noted that the Board is focused on operational expertise in its selection process.”
Nonetheless, both analysts remained on the sidelines and Hoexter trimmed his price target to $85 from a prior $88 given the earnings miss.
More pessimistically, Morgan Stanley analyst Ravi Shanker reiterated a Sell-equivalent rating and advised that the nature of the miss “may raise some fundamental questions” about the business.
“With NAST margins at or close to record lows at the top and bottom of the last 2 two cycles, investors may start to question the defensiveness of the brokerage business model itself,” he wrote.
Despite the mixed appraisals of the earnings results, CH Robinson stock ran 8.17% higher and eclipsed the century mark. Trading volume eclipsed the daily average by midday, perhaps benefiting from 12.43% short interest in the name.
Read the earnings call transcript.