C.H. Robinson Worldwide, Inc. (CHRW): High ROIC Makes This Stock an Attractive Long-Term Holding

However, even Expeditors is better off than J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), which owns many of the assets it uses to ship clients’ goods. Hunt has limited the cash necessary to invest for growth by focusing on the relatively high ROIC intermodal segment. In addition to offering high ROICs, intermodal offers the flexibility to switch between ships, trucks, and rail — depending on which is the most efficient given energy prices and destination. This affords it both an above-average ROIC and downside protection, but it is not nearly as capital-efficient as C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)’s model.

Key takeaway

C.H. Robinson’s high-ROIC model allows it to return an abnormally high amount of capital to shareholders while it continues to grow. Investors who buy the stock at a reasonable multiple of earnings (say, 17x or below) will be rewarded with above-average long-term gains.

Ted Cooper has no position in any stocks mentioned. The Motley Fool owns shares of Expeditors International of Washington.

The article High ROIC Makes This Stock an Attractive Long-Term Holding originally appeared on Fool.com.

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