CSX Results Chug Along

After market close yesterday, CSX Corporation (CSX - Analyst Report) kicked off first quarter earnings for the railroad group by reporting a 23% decline in diluted EPS to $0.62 from $0.80 in the year-ago quarter. This was well ahead of EPS consensus of $0.51 and our estimate of $0.57, largely due to a 57% decline in fuel expense on lower prices and volume.

Revenues dropped 17% year over year to $2.24 billion on a 17% fall in volume. Revenue per unit was up minimally to $1,584 from $1,580 in first quarter 2008. All businesses reported declining volumes and revenues, except Agricultural products, which was saved by gains in corn and ethanol shipments and experienced a 6% increase in revenues. This reflected higher pricing per unit as volume was flat.

The worst performances were in Merchandise and Automotive, which posted volume declines of 23% and 53%, respectively, and revenue decreases of 20% and 53%, respectively. Not surprisingly, these businesses suffered from weakness in industrial production, housing starts, and consumer spending.

We have a Hold recommendation on CSX. The current Zacks rank is 4, indicating near-term selling pressure on the shares. In morning trading, CSX is up over 8% from Tuesday’s closing price of $28.39.

Our estimates are under review.