Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

CSX Corporation (CSX - Analyst Report) reported second-quarter 2013 earnings of 52 cents per share, beating the Zacks Consensus Estimate of 47 cents and improving from the year-ago quarter figure of 49 cents.

The company’s second-quarter revenues were $3,069 million, slightly higher than $3,012 million in the prior-year quarter. The results also surpassed the Zacks Consensus Estimate of $3,022 million based on enhanced volumes and pricing along with improvement in operating efficiency and services.

Operating income increased 2% year over year to $963 million, while operating expense was $2,106 million, down 2%. Operating ratio (defined as operating expenses as a percentage of revenue) was 68.6%, down by 10 basis points.

Performance Across Business Lines

Merchandise revenues increased 4% year over year to $1,782 million in the reported quarter, supported by 1% growth in revenue per unit (RPU) and 3% expansion in volumes. The volume addition was driven by better performing Chemicals (up 11%), Minerals (up 7%), and Forest Products (up 3%).

Coal revenues were down 6% year over year at $770 million on 6% volume declines. RPU remained flat on a year-over-year basis. The weakness was due to lower domestic coal shipments. Export coal also suffered a significant setback due to less shipments of U.S. thermal coal to the European region as well as stiff competition.

Intermodal revenues rose 4% year over year to $425 million, driven by highway-to-rail conversions in the domestic market, increase in service lanes and customer base. On a year-over-year basis, both volumes and RPU increased 2% each.

Other revenues were $92 million, up 25% year over year.

Liquidity Position

The company exited the second quarter with cash and cash equivalents of $1,017 million compared with $1,371 million at the end of 2012. Long-term debt decreased to $8,811 million from $9,052 million at the end of 2012.

Guidance

Although earnings per share growth in 2013 will likely be flat compared with the prior-year level, the growth rate is expected to be in the 10–15% range through 2015.

Amid the current sluggish economic environment and volatile coal market scenario, CSX aims to bring down its operating ratio to the high 60s range by 2015 and subsequently move further down to mid 60s in the long term.

Our Take

We believe CSX has a number of profit generating factors that include favorable rail industry pricing, recovery of the construction sector, expansion of network and terminal capacity. Additionally, the company’s focus on operational improvement and rendering better services to customers at affordable costs will likely drive profitability.

However, we remain on the sidelines due to competitive pressure, a unionized workforce and increased railroad regulation that may pose as significant threats to the company’s growth. CSX Corp. – which operates with the likes of Canadian Pacific Railway Ltd. (CP - Analyst Report) – currently retains a Zacks Rank #3 (Hold).

Other Railroad Stocks

Among other stocks in the railroads industry, Kansas City Southern (KSU - Analyst Report) is expected to release its earnings results on Jul 19, while Norfolk Southern Corp. (NSC - Analyst Report) will do the same on Jul 23.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%