C.H. Robinson Worldwide (CHRW)

Freight transportation intermediary C.H. Robinson (NASDAQ:CHRW) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 8.3% year on year to $4.05 billion. Its non-GAAP profit of $1.17 per share was 11.3% 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).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, C.H. Robinson Worldwide grew its sales at a sluggish 2.5% compounded annual growth rate. This was below our standards and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. 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 12.1% 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 70.9% and 19.1% of revenue. Over the last two years, C.H. Robinson Worldwide’s North American surface transportation revenue (transportation brokerage) averaged 11.6% year-on-year declines while its Global Forwarding revenue (worldwide ocean, air, customers ) averaged 5.6% declines.

This quarter, C.H. Robinson Worldwide missed Wall Street’s estimates and reported a rather uninspiring 8.3% year-on-year revenue decline, generating $4.05 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.

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 7.6% gross margin over the last five years. Said differently, C.H. Robinson Worldwide had to pay a chunky $92.37 to its suppliers for every $100 in revenue.

C.H. Robinson Worldwide’s gross profit margin came in at 16.6% this quarter, marking a 10.1 percentage point increase from 6.5% 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).

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

C.H. Robinson Worldwide was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.3% was weak 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.

This quarter, C.H. Robinson Worldwide generated an operating profit margin of 4.4%, 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 an unimpressive 6% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t expand.

Diving into the nuances of C.H. Robinson Worldwide’s earnings can give us a better understanding of its performance. A five-year view shows that C.H. Robinson Worldwide has repurchased its stock, shrinking its share count by 10.3%. 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 more recent period because it can provide insight into an emerging theme or development for the business.

For C.H. Robinson Worldwide, its two-year annual EPS declines of 14% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, C.H. Robinson Worldwide reported EPS at $1.17, up from $0.86 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects C.H. Robinson Worldwide’s full-year EPS of $4.81 to stay about the same.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

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 3.1%, subpar for an industrials business.

Taking a step back, an encouraging sign is that C.H. Robinson Worldwide’s margin expanded by 1.4 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 $90.45 million in Q1, equivalent to a 2.2% margin. Its cash flow turned positive after being negative 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 23.5%, 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. Over the last few years, C.H. Robinson Worldwide’s ROIC has unfortunately decreased significantly. 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 $129.9 million of cash and $1.73 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 $903.7 million of EBITDA over the last 12 months, we view C.H. Robinson Worldwide’s 1.8× net-debt-to-EBITDA ratio as safe. We also see its $79.61 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.

It was encouraging to see C.H. Robinson Worldwide beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed significantly due to underperformance in its North American surface transportation segment. Overall, this was a weaker quarter, but the stock traded up 1.6% to $90.53 immediately after reporting.

Updated: July 10, 2025 at 11:24 PM EDT

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 doesn’t pass our quality test. To begin with, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate 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 20.8x. This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $109.97 on the company (compared to the current share price of $100.84).