Is C.H. Robinson Worldwide Stock A Buy?

There are not too many standout companies in the intermodal and expediting niche of companies. You have your two giant companies, your Coca-Cola (KO) and Pepsi (PEP) if you will, with Federal Express (FDX) and United Parcel Service (UPS) and there’s everybody else.

Among the “everybody else’ crowd is a company with a very long history in expediting in the Midwest and that company is C.H. Robinson Worldwide.

For investors the decision is between FedEx, UPS, or is C.H. Robinson Worldwide stock a buy?

C.H. Robinson Worldwide 101

The history of C.H. Robinson Worldwide starts with the very man that the company is named after, Charles Henry Robinson. 

Robinson was originally from St. Louis, Missouri and he was a traveling salesman for a few years in the late 1800s. Through his travels, he realized that there was a market for transporting perishable goods between towns. 

This was in the late 1800s, so the automobile wasn’t invented yet and transport was usually either by train or by horse & buggy. Robinson started up a distribution company in Grand Forks, North Dakota that used buggies to transport fruits and vegetables.

He partnered up with the Nash brothers (Willis King Nash & Fred Parks Nash) in this venture.

Robinson incorporated the company along with the Nash brothers in 1905 as C.H. Robinson Company. Charles Robinson passed away in 1909 and in 1913, and the Nash Brothers purchased Robinson’s widow out of her share of the company.

This gave the Nash Brothers total control of C.H. Robinson Company which operated under the umbrella of the Nash Brothers parent company, Nash Finch.

Nash Finch’s main business was operating a chain of grocery stores in the midwest. In 1919, the Brothers move the headquarters of C.H. Robinson from North Dakota to Minneapolis, Minnesota.  World War II would bring change not only to the country but to C.H. Robinson Company.

Federal regulators stepped in and broke up the company into two separate companies. C.H. Robinson Company was employee-owned and sold produce to warehouses owned by the parent company, Nash Finch. C.H. Robinson Inc. was owned by Nash Finch and retained the distribution arm of the business. 

This breakup lasted around 20 years with both companies being consolidated in the mid 1960s. Upon this consolidation, Nash Finch retained a 25 percent stake of the company.

After implementing rail distribution in 1945, the company would enter contact carrier business in 1968 with a fleet of semi trucks. By 1976, C.H. Robinson Company becomes 100% employee owned with the divestment of Nash Finch’s stake in the company.

The 1980s brought deregulation to the trucking industry and with it, even more changes to the way that business gets done. The introduction of computers, the introduction of ship transport and air cargo transport all signify what’s coming in the 1990s and 2000s as the company starts to grow exponentially.

C.H. Robinson Company becomes C.H. Robinson Worldwide in 1997 by going public with an IPO price of $5.72. Over the next 20 years, CHRW grew via acquisitions of many smaller transportation companies all over the world to stretch their business reach to all continents in the globe.

C.H. Robinson Worldwide Top Line

In spite of the economic turmoil over the past year, CHRW managed to squeeze out profits to the bottom line and top line revenues are projected to bounce back with a vengeance in 2021 if analysts expectations are met. 

C.H. Robinson Worldwide Competitors

The two big guns in the industry FedEx (FDX) and United Parcel Service (UPS) are both trending upwards as the world turned ever more virtual and ecommerce has supplanted brick and mortar stores.

Other rivals, Expeditors International of Washington (EXPD) and Forward Air (FWRD) are also trending upwards with recent gains in the market.

One way to view these trends is that the logistics industry is one of the few industries that haven’t been directly affected by the pandemic.

Supplies and commerce will always need to be transported no matter what’s going on in the world, so there’s always going to be a market for that.

Is C.H. Robinson Worldwide Stock A Buy?

Q3 revenues for the company were reported at $4.22 billion dollars and earnings per share of $1.00.

With the recent acquisition of Prime Distribution Services, this addition to the C.H. Robinson umbrella will help expand their nationwide reach even further.

If the last 12 months have told us anything, the logistics sector has experienced a small and steady growth over that time.

This growth was emboldened by the stratospheric leap in online sales with companies like Amazon (AMZN) reporting record sales in 2020. With current lockdown restrictions still in place in certain countries, this surge in online sales will continue into a majority of 2021.

2021 also ushers in a new President and a new regime on-board and with this change, the general hope of the country is starting to uptick a little and that should bode well for the logistics sector as it’ll be business as usual.

This would be especially evident if Biden’s administration shores up the current divide between the US and China on trade.

The mass rollout of vaccinations should also help the logistics industry with steady work on getting the vaccines out nationwide. That alone should be a boon for transportation and logistics.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.