With a notable daily gain of 12.26% and a 3-month gain of 9.74%, C.H. Robinson Worldwide Inc (CHRW, Financial) draws attention in the stock market. The company's Earnings Per Share (EPS) stands at 2.53. A pressing question arises: Is CHRW fairly valued at its current price of $80.93 per share? This analysis delves into the intrinsic valuation of CHRW, guiding potential investors through a detailed financial and strategic examination.
Company Overview
C.H. Robinson Worldwide is a premier non-asset-based third-party logistics provider, primarily engaged in domestic freight brokerage, which constitutes about 61% of its net revenue. The company also boasts a significant presence in air and ocean forwarding, alongside a growing European truck-brokerage division and other transportation management services. With a market cap of $9.40 billion and annual sales reaching $17.40 billion, understanding its current stock valuation against the GF Value of $82.69 becomes crucial for investors.
Understanding GF Value
The GF Value is a unique measure reflecting the true intrinsic value of a stock, based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For CHRW, the GF Value suggests a fair valuation, indicating that the stock price should ideally hover around this value. When a stock's price significantly exceeds the GF Value, it may be overvalued, leading to poorer future returns. Conversely, prices well below the GF Value could point to undervaluation, suggesting higher future returns.
At its current price, CHRW appears fairly valued. This alignment suggests that the long-term return of CHRW's stock will likely mirror the company's business growth rate.
Financial Strength and Stability
Investing in stocks requires a careful evaluation of a company's financial strength. CHRW's cash-to-debt ratio of 0.08 is lower than 87.68% of its peers in the Transportation industry, suggesting some risks associated with its debt levels. However, its overall financial strength rating of 6 out of 10 indicates a fair stability.
Profitability and Growth Prospects
CHRW has maintained profitability over the past decade, a reassuring sign for investors. The company's operating margin of 2.92% ranks it lower than 72.58% of its industry counterparts. Although CHRW's growth rates in revenue and EBITDA have been underwhelming compared to industry averages, its strong profitability score of 8 out of 10 underscores a robust financial core.
Moreover, the comparison of Return on Invested Capital (ROIC) at 11.67 against the Weighted Average Cost of Capital (WACC) of 8.16 indicates that CHRW is effectively creating value for its shareholders, reflecting a positive investment outlook.
Conclusion
In conclusion, C.H. Robinson Worldwide (CHRW, Financial) is currently priced close to its intrinsic value as per the GF Value, indicating a fair valuation. The company's financial health is stable, though it faces challenges in growth dynamics. For a deeper insight into CHRW's financials and stock performance, interested investors can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
