Since September 2024, C.H. Robinson Worldwide has been in a holding pattern, posting a small loss of 1.4% while floating around $98.88.
Is now the time to buy C.H. Robinson Worldwide, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
We're sitting this one out for now. Here are three reasons why we avoid CHRW and a stock we'd rather own.
Why Do We Think C.H. Robinson Worldwide Will Underperform?
Engaging in contracts with tens of thousands of transportation companies, C.H. Robinson (NASDAQ:CHRW) offers freight transportation and logistics services.
1. Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, C.H. Robinson Worldwide’s sales grew at a sluggish 3% compounded annual growth rate over the last five years. This fell short of our benchmarks. 
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
C.H. Robinson Worldwide’s EPS grew at a weak 1.5% compounded annual growth rate over the last five years, lower than its 3% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
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. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
C.H. Robinson Worldwide doesn’t pass our quality test. That said, the stock currently trades at 19.8× forward price-to-earnings (or $98.88 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. We’d suggest looking at one of our all-time favorite software stocks.
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