Big names in the freight industry such as FedEx (NYSE: FDX) and UPS (NYSE: UPS) have already fared well in the earnings confessional, and coming up this week is C. H. Robinson Worldwide(NASDAQ: CHRW), which provides third-party transportation and logistical solutions to a variety of industries.
By acting as much more than a transportation company, CHRW is well positioned to benefit from a wider array of services such as managing supply chains and information management.
CHRW is due to report after the bell on Tuesday. Analysts and the whisper number call for a one-cent increase from a year ago. That’s probably a reasonable expectation given that profits have been flat for the past two quarters.
CHRW’s chart is a plus, especially after the stock popped to a two-month high on Friday. That move pushed the shares far above any potential trendline resistance. The next obstacle comes in the 62 area, the site of the April highs.
The main factor underlying this trade is sentiment, which is clearly aligned against CHRW. The put/call ratio is sitting at an annual high, the short-interest ratio is a very high 8 and only half the covering analysts rate the shares a “buy.” Taken together, these indicators tell us that the Street isn’t expecting much from CHRW come Tuesday evening.
Given CHRW’s multi-faceted service offerings and the performance of those in the same sector, we feel CHRW should do well in its earnings report. And it won’t take much to get the bears changing their minds on the stock. Should that happen, a move above the April highs is a reachable target.
The in-the-money August 60 call should give you more than enough leverage to play the expected move.
C.H. Robinson Worldwide
Total return (10-year): +692%2008 earnings per share: $2.082009 expected earnings per share: $2.12Beta (10-year): 0.531Dividend: Has raised its dividend every one of the last ten years
C.H. Robinson Worldwide (CHRW) is a third-party logistics firm. It helps companies coordinate freight transportation, working with about 50,000 trucking, railroad, air freight, or ocean shipping companies.
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