Corporate profits have been singing "Nobody Knows the
Trouble I've Seen" for a while. But "Things Can Only Get
Better" would make a more appropriate theme song for this
earnings season.
Like Howard Jones, third-party freight transport and
logistics company
C.H. Robinson Worldwide (Nasdaq: CHRW)
probably feels optimistic about things in general. Profitable
businesses typically spend more than unprofitable ones -- and
companies whose stock prices are up 55% since last year
undoubtedly have something to celebrate, especially when they
beat earnings estimates.
Is this the turnaround?
Robinson isn't the only company to outpace Wall
Street's guesses. Among the big timers to report bottom lines
in excess of analysts' expectations this week have been
cash-rich
Apple (Nasdaq: AAPL) and
exceedingly efficient
Texas Instruments (NYSE: TXN). By tomorrow,
we'll know if
American Express (NYSE: AXP) and
Amazon.com (Nasdaq: AMZN) will
continue the trend.
With profits picking back up, business-to-business
commerce should be due for a comeback, which Robinson would
certainly welcome. The company has seen revenue shrink
throughout the downturn, with sales down 15.6% to $1.95
billion in its third quarter.
Turning lemons into lemonade
Still, falling sales haven't killed the company's
earnings, thanks to steadily improving margins. Net earnings
grew 2% to $95.5 million, or $0.57 per share. And just take a
look at the company's consistent margin growth over the past
year:
Q4 2008
 Q1 2009
 Q2 2009
 Q3 2009
Change in Sales
0.2%
(15%)
(17%)
(15.6%)
Increase in Gross Margin
107 bp
303 bp
357 bp
286 bp
Increase in Operating Margin
48 bp
128 bp
156 bp Continued... |