In a bid to strengthen its Global Forwarding business, C.H. Robinson CHRW acquired the Madrid, Spain-based freight forwarder — The Space Cargo Group — for approximately €42 million ($48 million). The acquisition is anticipated to be accretive to C.H. Robinson’s results in the current year.
C.H. Robinson will utilize its current cash balance to finance the buyout of this provider of ocean, air freight forwarding, customs brokerage and other logistics services. The Space Cargo Group, with seven offices in Spain and one in Columbia, has a customer base in excess of 2,500.
Notably, The Space Cargo Group products will be part of C.H. Robinson’s Global Forwarding unit. Currently, the unit boasts more than 4,000 employees and 125 global offices across five continents and 32 countries. In the fourth quarter of 2018, the Global Forwarding unit contributed 16.4% to C.H. Robinson’s top line, reflecting a 14.5% increase year over year.
We believe this latest buyout to favor C.H. Robinson as the field offers significant commercial potential. In fact, the global airfreight forwarding market is expected to exhibit a CAGR of approximately 4% during the 2018-2022 time frame.
Rapid e-commerce growth is the key catalyst behind the lucrativeness of the global airfreight forwarding market, which includes the likes of Expeditors International of Washington EXPD apart from C.H. Robinson.
We note that this Zacks Rank #3 (Hold) company is active on the acquisition front. The Space Cargo buyout apart, other notable acquisitions by this Minnesota-based company include the purchase of Milgram & Company in 2018 and APC Logistics in 2016.
Stocks to Consider
Investors interested in the broader Transportation sector may consider Azul S.A. AZUL and SkyWest SKYW, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both stocks boast an impressive earnings surprise history. Azul outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 97.9%. SkyWest exceeded the consensus mark in each of the trailing four quarters, with an average beat of 16.9%.
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SkyWest, Inc. (SKYW) : Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
AZUL SA (AZUL) : Free Stock Analysis Report
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