June 11, 2008 - C. H. Robinson Worldwide, Inc. (CHRW-NASDAQ) keeps merchandise moving. A leading third-party logistics provider, the company arranges freight transportation using trucks, trains, ships, and airplanes belonging to other companies. It contracts with some 48,000 carriers. CHRW handles about 6.5 million shipments per year for its 29,000-plus customers, which include companies in the food and beverage, manufacturing, and retail industries. Together with overseeing freight transportation for its customers, it offers supply chain management services. In addition, CHRW buys, sells, and transports fresh produce throughout the US, and its T-Chek unit provides fuel purchasing management services for motor carriers.

The company is a go-between. It goes between the manufacturing and the transport companies. The manufacturers pay Robinson upfront, then it goes out and negotiates the best deal it can, using the funds provided. It makes profit by paying less for the services than what the manufacturers give them. When times are slow, transporters have excess capacity and are receptive to lower rates to keep their trucks or containers moving. So CHRW can negotiate a better price in slow times and make more profits since it doesn't pass all of those savings on to manufacturers.

Earnings have been growing steadily, up every year since the company went public in 1997 when the bottom line showed 17 cents a share. Last year the company earned $1.86. This year, analysts think it will be $2.17 and next year $2.49. Over the last 5 years, earnings per share (eps) improved, on average, by 25.5% a year on sales that went up by 15.5% a year, on average. Over the next 5 years, analysts suggest growth of revenues at 11.5% a year, on average, and eps of 13.5% a year.

Expansion plans will cut into operating margins for a while. The company is opening new offices and hiring more people. There were 10% more employees in March than there were a year ago with more to be added. These new expenses will take a while to cover as the new offices generate new business.

Other numbers: Very impressive Return on Equity of 31% last year with analysts looking for the same this year. There's a divdend of 88 cents a year for a yield of 1.8%. It takes about 40% of the profits. Net profit margin was 4.4% last year. Expect 4.3% this year and 4.4% again next year. Market cap is $10.8 billion on 171 million shares. Sales were $7.316 billion last year. This year analysts see $8.385 billion and $9.5 billion next year. About 42% of the stock is held by institutions.

The stock's price reflects the enthusiasm investors have for the story (and the earnings). It's up 30% since the beginning of the year and reached an all-time high of $67.40 (split adjusted) recently. With a P/E of 31, the stock isn't cheap. But if expansion plans pay off and eps grows a little better than estimates, this stock may continue its upward path for some time to come.

- Company Web site: www.chrobinson.com

- Ted Allrich