C.H. Robinson Worldwide (CHRW)

Freight transportation intermediary C.H. Robinson (NASDAQ:CHRW) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 10.9% year on year to $4.14 billion. Its non-GAAP profit of $1.40 per share was 7.4% above analysts’ consensus estimates.

Company Overview

Engaging in contracts with tens of thousands of transportation companies, C.H. Robinson (NASDAQ:CHRW) offers freight transportation and logistics services.

The growth of e-commerce and global trade continues to drive demand for expedited shipping services, presenting opportunities for air freight companies. The industry continues to invest in advanced technologies such as automated sorting systems and real-time tracking solutions to enhance operational efficiency. Despite the advantages of speed and global reach, air freight and logistics companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.

Competitors offering similar products include Expeditors (NYSE:EXPD), UPS (NYSE:UPS), and FedEx (NYSE:FDX).

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, C.H. Robinson Worldwide grew its sales at a weak 1.3% compounded annual growth rate. This fell short of our benchmarks and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. C.H. Robinson Worldwide’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.4% annually. C.H. Robinson Worldwide isn’t alone in its struggles as the Air Freight and Logistics industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can better understand the company’s revenue dynamics by analyzing its most important segments, North American surface transportation and Global Forwarding, which are 71.7% and 19% of revenue. Over the last two years, C.H. Robinson Worldwide’s North American surface transportation revenue (transportation brokerage) averaged 5.6% year-on-year declines. On the other hand, its Global Forwarding revenue (worldwide ocean, air, customers ) averaged 3.2% growth.

This quarter, C.H. Robinson Worldwide missed Wall Street’s estimates and reported a rather uninspiring 10.9% year-on-year revenue decline, generating $4.14 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2.8% over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

C.H. Robinson Worldwide has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 7.7% gross margin over the last five years. That means C.H. Robinson Worldwide paid its suppliers a lot of money ($92.29 for every $100 in revenue) to run its business.

C.H. Robinson Worldwide’s gross profit margin came in at 17.1% this quarter, marking a 9 percentage point increase from 8.1% in the same quarter last year. C.H. Robinson Worldwide’s full-year margin has also been trending up over the past 12 months, increasing by 3.4 percentage points. If this move continues, it could suggest better unit economics due to some combination of stable to improving pricing power and input costs (such as raw materials).

C.H. Robinson Worldwide’s operating margin has risen over the last 12 months and averaged 4.4% over the last five years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports lousy profitability for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, C.H. Robinson Worldwide’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. C.H. Robinson Worldwide’s performance was poor, but we noticed this is a broad theme as many similar Air Freight and Logistics companies saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction.

This quarter, C.H. Robinson Worldwide generated an operating margin profit margin of 5.3%, up 1.5 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

C.H. Robinson Worldwide’s EPS grew at a decent 8.8% compounded annual growth rate over the last five years, higher than its 1.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into C.H. Robinson Worldwide’s earnings quality to better understand the drivers of its performance. A five-year view shows that C.H. Robinson Worldwide has repurchased its stock, shrinking its share count by 11.5%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For C.H. Robinson Worldwide, its two-year annual EPS growth of 16.3% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q3, C.H. Robinson Worldwide reported adjusted EPS of $1.40, up from $1.28 in the same quarter last year. This print beat analysts’ estimates by 7.4%. Over the next 12 months, Wall Street expects C.H. Robinson Worldwide’s full-year EPS of $5.07 to grow 6.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

C.H. Robinson Worldwide has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.3%, subpar for an industrials business.

Taking a step back, an encouraging sign is that C.H. Robinson Worldwide’s margin expanded by 4.3 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

C.H. Robinson Worldwide’s free cash flow clocked in at $256.8 million in Q3, equivalent to a 6.2% margin. This result was good as its margin was 4.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although C.H. Robinson Worldwide hasn’t been the highest-quality company lately because of its poor top-line performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 24.1%, splendid for an industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, C.H. Robinson Worldwide’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

C.H. Robinson Worldwide reported $136.8 million of cash and $1.50 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $911.6 million of EBITDA over the last 12 months, we view C.H. Robinson Worldwide’s 1.5× net-debt-to-EBITDA ratio as safe. We also see its $64.49 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

Despite missing on revenue, operating margin increased nicely year-on-year and EPS beat. The stock traded up 13% to $146.39 immediately after reporting.

Updated: December 4, 2025 at 10:26 PM EST

Before investing in or passing on C.H. Robinson Worldwide, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

C.H. Robinson Worldwide isn’t a terrible business, but it doesn’t pass our quality test. To begin with, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its stellar ROIC suggests it has been a well-run company historically, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its low gross margins indicate some combination of competitive pressures and high production costs.

C.H. Robinson Worldwide’s P/E ratio based on the next 12 months is 28.2x. At this valuation, there’s a lot of good news priced in - you can find more timely opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $152.20 on the company (compared to the current share price of $157.85), implying they don’t see much short-term potential in C.H. Robinson Worldwide.