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CSX Stock is a Must Add to Investors' Portfolios: Here's Why

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Shares of CSX Corporation (CSX - Free Report) have gained 15.1% in a year’s time compared with the 8.1% appreciation of its industry.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s look into the factors that are working in favor of this currently Zacks Rank #2 (Buy) stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Northward Earnings Estimates: The Zacks Consensus Estimate for the current-quarter earnings has moved up 5.3% over the past 90 days. For 2021, the consensus mark for earnings has moved 4.9% north during the same time frame. The favorable estimate revisions reflect the confidence of brokers in the stock.

Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the path of estimate revisions serves as an important pointer when it comes to ascertaining the stock price.

Impressive Revenue Growth: The Zacks Consensus Estimate for the current-quarter revenues is pegged at $3.12 billion, indicating a 17.8% rise from the year-ago quarter’s reported figure. Similarly, the consensus mark for the current-year revenues stands at $12.07 billion, calling for a 14% increase from the prior-year reported figure.

Favorable Earnings Surprise History: CSX has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed in the other. The average earnings beat is 3.31%.

Other Tailwinds: Improvement in the freight scenario as a result of growing economic activity has resulted in a favorable environment surrounding the railroad industry. With the freight scene on the mend, the overall volumes at CSX are increasing, mainly to upbeat intermodal volumes. In the first half of 2021, total volumes increased 13%. As the economy continues to recover, CSX anticipates its volumes to keep improving. The company hopes to achieve double-digit revenue growth (excluding benefits from Quality Carriers transaction) in 2021.

The company’s measures to reward its shareholders are impressive as well. During the first half of 2021, CSX returned $1.7 billion to its shareholders through $1.3 billion in buybacks and $400 million in dividends. Its liquidity position is encouraging as well.

Other Stocks to Consider

Investors interested in the broader Zacks Transportation  sector can also consider stocks like Matson (MATX - Free Report) , ArcBest Corporation (ARCB - Free Report) and Echo Global Logistics , each sporting a Zacks Rank #1, currently.

Shares of Matson, ArcBest and Echo Global have rallied more than 104%, 143% and 78% in a year’s time, respectively. 


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