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Will C.H. Robinson Worldwide Beat Revenues in 1Q18?

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CHRW’s 1Q18: Analysts’ revenue estimates

Analysts polled by Thomson Reuters estimate that C.H. Robinson Worldwide (CHRW) will report revenues of $3.8 billion in 1Q18. The company recorded total revenues of $3.9 billion in fiscal 1Q17, which implies that analysts estimate a 13% YoY (year-over-year) rise for CHRW’s revenues in 1Q18.

On a yearly basis, analysts anticipate CHRW to report revenues of $16.2 billion in 2018, which translates into 8.7% YoY growth. CHRW is bullish on the contractual pricing rates in 2018 for its truckload transportation business. The company predicts high-single-digit to low-double-digit growth in its contractual pricing rates in the current year. Now let’s look at the key factors that could affect CHRW’s revenues in 1Q18 and subsequent quarters.

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Factors that may impact revenues in 1Q18 and later

C.H. Robinson Worldwide expects a pricing rise in its truckload transportation business to be a recurring theme in 2018. In 4Q17, pricing for the company’s same business increased 15% YoY, although volumes declined 3% YoY. The expected rise in pricing should be driven by a healthy economy, tight capacity environment, and higher freight demand.

Being positive on pricing gains, CHRW, however, foresees a decline in volume against an increase in prices. Market Realist believes that, over a longer period, CHRW’s truckload volume will increase, resulting in a market share gain for the company. On the other hand, the company is strongly positioned to grow its market share in the international ocean forwarding and international air cargo business. This outlook indicates that the company may meet analysts’ top-line expectations in 1Q18.

Peer group’s 1Q18 revenues and growth

For CHRW’s major peer, Expeditors International of Washington, (EXPD), analysts anticipate revenues of $1.7 billion in 1Q18. This revenue would result in an estimated growth rate of 11% YoY. For Hub Group (HUBG), Wall Street predicts 15% revenue growth YoY, with expected revenues of $1.0 billion. Forward Air’s (FWRD) 1Q18 revenues are expected to grow 17.5% YoY, touching $290.2 million.

The benchmark SPDR S&P Transportation ETF (XTN) invests 24.5% and 12.7% of its portfolio in major US trucking companies and railroad companies, respectively. CHRW makes up 2.6% of XTN’s holdings.

In the next part of this series, we’ll assess analysts’ earnings estimate for CHRW and peers in 1Q18.

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