CHRW Investment Analysis Report & Stock Research, C.H. Robinson Worldwide, Inc.

CHRW Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at CHRW through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 1.51x and 0.94x respectively.

Utilizing this range we can see that CHRW’s current Price to Sales per share ratio of 1.18x is slightly under its historical average. This level of Price to Sales gives us a fairly neutral position on the CHRW shares. We would like to see a drop in the Price to Sales ratio just a little bit more (given current sales figures) before we would become more positive on a Price to Sales basis. Such a drop would increase the attractiveness of the stock but, as always, would need to be considered in the context of all other valuation factors.

CHRW Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of CHRW, Ockham views their current Cash Earnings as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for CHRW to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 34.75 and a 21.60 low over the same period.

So with CHRW's current price (latest close of $53.87) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, CHRW is 19% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with CHRW.

CHRW Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In CHRW’s case, the estimated annual dividend is $1.00 resulting in a current dividend yield of 1.86%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from CHRW against the historic high and low levels over the past 10 years. The highest dividend yield from CHRW over this period was 2.60% while the lowest dividend yield was 0.62% It's hard not to notice that CHRW pays a current dividend yield that is 15.53% above the historical median. This peaks our interest since our analysis looks favorably upon dividend yields that are greater than the historical median.