Reiterating her views for C.H. Robinson Worldwide (CHRW), Zacks senior transport industry analyst Ann H. Heffron, CFA explains why the shares of the logistics company have been rated Hold:
'We are maintaining our Hold on C.H. Robinson Worldwide, Inc., but increasing our target price to $56. CHRW is expected to report third quarter results on October 23, 2007. We are continuing our diluted EPS estimates at $1.85 for 2007 and at $2.15 for 2008.
'The slowing domestic economy could pressure both 2007 pricing and volume, with comparisons in the second half likely to be more difficult. CHRW reported 2007 second quarter EPS of $0.47, 24% above 2006's results and meeting consensus, but $0.03 higher than our $0.44 estimate, primarily reflecting improved truck margins due to excess capacity in this market. Truck volumes were also strong, rising 7-8% on increased market share. We believe CHRW's dividend is safe.
'Considering the company's non-asset-based model, zero debt, strong liquidity and industry-leading dividend yield of 1.3%, we find the premium to be warranted when compared with the industry. However, we cannot make a case for meaningful P/E expansion from here. Hence, the upside share price potential appears limited. Our six-month price target of $56 represents roughly a 26X P/E multiple of our 2008 EPS estimate of $2.15.'
Read the full analyst report on CHRW.
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