DCF Studio

    CHRW · NMS · Industrials

    C.H. Robinson Worldwide, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 25.23

    Market price

    USD 152.99

    Implied upside

    -83.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages just 0.46% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.5%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Current EV/EBITDA of 21.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 25.23-83.5%
    Exit multiple
    USD 46.96-69.3%
    Market price
    USD 152.99

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m310m620mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 14.1bnUSD 12.3bnUSD 10.7bnUSD 9.3bnUSD 8.1bn-13.1%
    EBITUSD 590.2mUSD 513.1mUSD 446.2mUSD 387.9mUSD 337.3m-13.1%
    NOPATUSD 475.1mUSD 413.1mUSD 359.2mUSD 312.3mUSD 271.5m-13.1%
    Add depreciation & amortisationUSD 74.8mUSD 65.0mUSD 56.5mUSD 49.2mUSD 42.7m-13.1%
    Less capital expenditureUSD -141.1mUSD -122.7mUSD -106.7mUSD -92.8mUSD -80.7m-13.1%
    Less increase in working capitalUSD 211.2mUSD 183.7mUSD 159.7mUSD 138.8mUSD 120.7m+13.1%
    Free cashflow to firmUSD 620.0mUSD 539.1mUSD 468.7mUSD 407.5mUSD 354.3m-13.1%
    Discount factor0.95420.86870.79100.72010.6557-
    Present valueUSD 591.6mUSD 468.3mUSD 370.7mUSD 293.5mUSD 232.3m-20.8%
    Present Value Of The ForecastUSD 2.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.962Reported 0.943, pulled toward 1.0 (Blume)
    Cost of equity10.29%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 17.9bn92.8% of capital
    Total debtUSD 1.4bn7.2% of capital, book value as a proxy
    Tax rate19.5%Effective, capped at statutory
    WACC9.83%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 25.23

    55% of EV

    Forecast FCFF, final year
    USD 354.3m
    Capex at depreciation, working capital in reinvestment
    USD 293.2m
    Less reinvestment at g/ROIC (12.8% of NOPAT)
    USD -37.4m
    Capitalised
    USD 255.8m
    ROIC (reported)
    19.6%
    Terminal value, undiscounted
    USD 3.6bn
    Terminal value, discounted
    USD 2.3bn
    Enterprise value
    USD 4.3bn
    Less net debt
    USD 1.2bn
    Equity value
    USD 3.1bn

    Exit at 20.0x EBITDA

    Value per shareUSD 46.96

    72% of EV

    Terminal value, undiscounted
    USD 7.6bn
    Terminal value, discounted
    USD 5.0bn
    Enterprise value
    USD 6.9bn
    Less net debt
    USD 1.2bn
    Equity value
    USD 5.7bn

    Spread between methods: 60%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.83%32.0033.5435.3837.5840.27
    8.83%27.3228.3429.5230.9032.52
    9.83%23.7424.4425.2326.1427.18
    10.83%20.9021.4021.9522.5623.26
    11.83%18.6018.9519.3419.7720.24

    Outlined: this model. Green text: above today's price of 152.99. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-13.1%32.3%+45.3pp
    EBIT margin4.2%21.9%+17.7pp
    Discount rate9.8%3.8%-6.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.