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CSX Hits 52-Week High on Several Tailwinds, 2017 View Upbeat

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CSX Corporation (CSX - Free Report) hit a 52-week high of $56.17 per share during the trading session on Nov 30, before retracing a bit to close the session at $55.75. Notably, the company’s shares have performed very well in a year. The stock has surged 52.8%, comfortably outpacing the industry’s gain of 22.5%.



Catalysts Behind the Upsurge

The precision scheduled railroading model adopted by CSX’s CEO Hunter Harrison to improve its efficiencies has helped the company make a substantial progress over the last few months. Evidently, its third-quarter 2017 earnings improved 6.3% year over year. Revenues in the period too rose owing to core pricing gains. The 10% increase in coal revenues is also encouraging.

The company’s 2017 outlook is impressive as well. Driven by improved efficiencies, the company expects its bottom line to expand between 20% and 25% in 2017 on a year-over-year basis. Operating ratio is expected in the high end of mid-60s in 2017. Additionally, the company expects free cash flow before dividends (excluding restructuring costs) of around $1.5 billion in the year.

The company has been making continued efforts to improve efficiency. To this end, it has laid off more than 2,000 employees so far this year. The workforce is further expected to be trimmed by the year-end.

CSX’s efforts to reward shareholders through dividend payments and buybacks also raise optimism in the stock. The company had earlier announced an 11% dividend hike in 2017. The new quarterly dividend is 20 cents a share. Further, the company has bought back shares in excess of $1.3 billion so far this year.

Zacks Rank & Key Picks

CSX carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Gol Linhas Aereas Inteligentes S.A. , International Consolidated Airlines Group SA (ICAGY - Free Report) and SkyWest, Inc. (SKYW - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Gol Linhas, International Consolidated Airlines and SkyWest have surged more than 100%, 57% and 42%, respectively, in a year.

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