We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Add CSX Corp (CSX) to Your Portfolio
Read MoreHide Full Article
Jacksonville, FL-based CSX Corporation (CSX - Free Report) has been performing very well this year. Shares of this Zacks Rank #2 (Buy) company have gained 46.4% on a year-to-date basis, outperforming the Zacks categorized Transportation-Rail industry’s rally of 15.3%.
CSX Corp is benefiting from an improvement in the coal-related scenario, which has been aiding overall volume growth.In fact, volume growth is expected in the second quarter as well. Moreover, the company's efforts to boost its bottom line by controlling costs are impressive. In particular, CSX Corp’s CEO, E. Hunter Harrison, who joined the company a few months back, intends to drive growth at CSX Corp by slashing costs. Harrison was earlier working at Canadian Pacific Railway Limited (CP - Free Report) .
We are also impressed by the 11% dividend hike announced by CSX Corp earlier this year in its quarterly dividend payout. Following the announcement, the new quarterly dividend is $0.20 per share. It is to be noted that the company’s dividend has been increased 13 times, since 2005.
In another shareholder friendly move, CSX's Board cleared a new $1 billion share buyback program. Management expects to complete the new program by Mar 31, 2018.
Notably, the company has an impressive track record with respect to earnings per share having outperformed the bottom line in five of the last seven quarters. In fact, in the recently reported quarter (first quarter of 2017) the railroad operator performed very impressively, outperforming not only with respect to earnings but also revenues.
Earnings Estimates on an Upswing
The optimism surrounding the stock can be gauged from the fact that the Zacks Consensus Estimate for 2017 has moved north by 11.2% to $2.29 per share over the last 90 days, on the back of multiple upward revisions. In fact, earnings per share for the current year are projected to grow at a healthy 26.7%, over 2016 levels.
Additionally, the Zacks Consensus Estimate for 2018 has jumped 16.5% to $2.75 per share in the last three months.
Valuation & Style Score
On a price-to-book basis, shares are trading at 4.1x, which is less than the industry average of 4.6x. Also, on a price-to-sales basis, shares are trading at 4.3x, a discount to the industry average of 4.9x. In fact, going by the EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization) ratio, the stock does not look too expensive at this point. The stock currently has a trailing 12-month EV/EBITDA ratio of 12.82, which again compares favorably to the industry value.
Additionally, the stock has an attractive VGM Score of ‘B’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Taking into account the above-mentioned tailwinds and the favorable readings, we believe that the current price represents an attractive entry point for investors. Furthermore, the railroad’s bullish Zacks Rank supports our view.
Union Pacific’s 2017 Zacks Consensus Estimate for earnings has climbed 2% to $5.7 per share in the last two months.
Alstom’s Zacks Consensus Estimate for earnings in the current year is projected to grow 54.55%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why You Should Add CSX Corp (CSX) to Your Portfolio
Jacksonville, FL-based CSX Corporation (CSX - Free Report) has been performing very well this year. Shares of this Zacks Rank #2 (Buy) company have gained 46.4% on a year-to-date basis, outperforming the Zacks categorized Transportation-Rail industry’s rally of 15.3%.
CSX Corp is benefiting from an improvement in the coal-related scenario, which has been aiding overall volume growth.In fact, volume growth is expected in the second quarter as well. Moreover, the company's efforts to boost its bottom line by controlling costs are impressive. In particular, CSX Corp’s CEO, E. Hunter Harrison, who joined the company a few months back, intends to drive growth at CSX Corp by slashing costs. Harrison was earlier working at Canadian Pacific Railway Limited (CP - Free Report) .
We are also impressed by the 11% dividend hike announced by CSX Corp earlier this year in its quarterly dividend payout. Following the announcement, the new quarterly dividend is $0.20 per share. It is to be noted that the company’s dividend has been increased 13 times, since 2005.
In another shareholder friendly move, CSX's Board cleared a new $1 billion share buyback program. Management expects to complete the new program by Mar 31, 2018.
Notably, the company has an impressive track record with respect to earnings per share having outperformed the bottom line in five of the last seven quarters. In fact, in the recently reported quarter (first quarter of 2017) the railroad operator performed very impressively, outperforming not only with respect to earnings but also revenues.
Earnings Estimates on an Upswing
The optimism surrounding the stock can be gauged from the fact that the Zacks Consensus Estimate for 2017 has moved north by 11.2% to $2.29 per share over the last 90 days, on the back of multiple upward revisions. In fact, earnings per share for the current year are projected to grow at a healthy 26.7%, over 2016 levels.
Additionally, the Zacks Consensus Estimate for 2018 has jumped 16.5% to $2.75 per share in the last three months.
Valuation & Style Score
On a price-to-book basis, shares are trading at 4.1x, which is less than the industry average of 4.6x. Also, on a price-to-sales basis, shares are trading at 4.3x, a discount to the industry average of 4.9x. In fact, going by the EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization) ratio, the stock does not look too expensive at this point. The stock currently has a trailing 12-month EV/EBITDA ratio of 12.82, which again compares favorably to the industry value.
Additionally, the stock has an attractive VGM Score of ‘B’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Taking into account the above-mentioned tailwinds and the favorable readings, we believe that the current price represents an attractive entry point for investors. Furthermore, the railroad’s bullish Zacks Rank supports our view.
Other Stocks to Consider
Investors interested in the railroad space may also consider Union Pacific Corporation (UNP - Free Report) and Alstom SA (ALSMY - Free Report) carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Union Pacific’s 2017 Zacks Consensus Estimate for earnings has climbed 2% to $5.7 per share in the last two months.
Alstom’s Zacks Consensus Estimate for earnings in the current year is projected to grow 54.55%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
Click here for a peek at this private information >>