C.H. Robinson Raises Share Buyback - Analyst Blog
13 August 2012 - 7:35PM
Zacks
C.H. Robinson Worldwide, Inc. (CHRW) has
announced an increase in its share repurchase program by up to 10
million shares. This represents approximately 6.2% of the company’s
outstanding shares as of August 10. The company is currently
authorized to buy back 2.5 million shares under a program approved
in 2009.
Apart from increasing share buyback, the company also declared a
quarterly dividend of 33 cents to shareholders of record on
September 7, payable on October 1. The company has continuously
paid out dividends to shareholders for over twenty-five years. In
December 2011, C.H. Robinson boosted its annual dividend to $1.32
per share for this year from $1.16 per share paid in 2011.
C.H. Robinson continues to strengthen its balance sheet with no
debt and excess liquidity. The company has generated substantial
cash from operations over the past several years. This has been
utilized in numerous investment activities such as internal growth,
acquisitions, share repurchases or dividend increases.
Apart from investor returns, the company also focuses on
increased investments on rail infrastructure. During the second
quarter, the company raised its estimated capital expenditures for
fiscal 2012 to $46-$51 million from $40-$45 million, given the
increased investment in technology and infrastructural
developments.
We believe that the company’s increased investor return and
capital expenditure stems from its continued growth despite
uncertainties surrounding the truck market. Being a third party
logistic company, C.H. Robinson’s asset-light model provides
greater earnings flexibility during an economic downturn.
In addition, its multi-modal solutions remain advantageous in
the current freight market by providing a one-stop solution for
shippers, hence leading to reduced overall shipping cost.
Additionally, the company’s diversified transport solutions help it
significantly despite a volatile truck market that constitutes a
significant revenue contributor.
However, C.H. Robinson remains challenged by rising third party
carrier cost. Given capacity issues, independent truck owners are
expected to further increase prices that could, in turn, compress
margins. Further, regulatory issues and competitive threats from
logistics services companies such as Expeditors
International of Washington Inc. (EXPD) also pose
significant threats to the company’s profitability.
We are currently maintaining our long-term Neutral
recommendation on C.H. Robinson. For the short term, the company
holds a Zacks #4 Rank (Sell).
CH ROBINSON WWD (CHRW): Free Stock Analysis Report
EXPEDITORS INTL (EXPD): Free Stock Analysis Report
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