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CSX Tops Q3 Earnings Estimates, Shares Up on New $5B Buyback

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CSX Corporation's (CSX - Free Report) third-quarter 2020 earnings of 96 cents per share surpassed the Zacks Consensus Estimate of 93 cents. However, the bottom line declined 11.1% year over year due to a drop in revenues. Meanwhile, total revenues of $2,648 million lagged the Zacks Consensus Estimate of $2,704.6 million and also declined 11.1% year over year owing to coal and merchandise volume declines, thanks to coronavirus.

CSX’s board approved a new share buyback program, worth $5 billion. This is in addition to approximately $1.1 billion already remaining under the existing share repurchase program. This shareholder friendly initiative drove shares of the company up more than 3% in after-market trading on Oct 21.

Third-quarter operating income fell 11% to $1,141 million. Operating ratio (operating expenses as a percentage of revenues) deteriorated to 56.9% from 56.8% in the prior-year quarter as a result of low revenues. Notably, lower the value of the metric, the better. Total expenses declined 11% year over year in the reported quarter. Costs reduced primarily due to increased efficiency.

CSX Corporation Price, Consensus and EPS Surprise

CSX Corporation Price, Consensus and EPS Surprise

CSX Corporation price-consensus-eps-surprise-chart | CSX Corporation Quote

Segmental Performance

Merchandise revenues plummeted 7% year over year to $1,777 million in the quarter under review. Merchandise volumes also slipped 5%.

Coal revenues plunged 36% year over year to $330 million in the reported quarter. Coal volumes contracted 27% due to lower domestic and export coal volumes.

Intermodal revenues were flat year over year at $445 million. Volumes increased 7% with both domestic and international shipments increasing as a result of tightening truck capacity among other factors.

Other revenues dropped 12% to $96 million in the reported quarter.

Liquidity & Share Buyback

This Zacks Rank #3 (Hold) company exited the third quarter with cash and cash equivalents of $2,898 million compared with $958 million at the end of December 2019. Long-term debt totaled $16,121 million compared with $15,993 million at 2019-end. As of Sep 30, 2020, net cash provided by operating activities was $3,128 million, compared with $3,737 million in the year-earlier period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

As of Sep 30, 2020, CSX repurchased 10 million shares for $664 million.

Sectorial Snapshot

Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.

Kansas City Southern (KSU - Free Report) , carrying a Zacks Rank #3, reported third-quarter 2020 earnings (excluding 5 cents from non-recurring items) of $1.96 per share, beating the Zacks Consensus Estimate of $1.88. Meanwhile, quarterly revenues of $659.6 million lagged the Zacks Consensus Estimate of $662.4 million.

JB Hunt Transport Services Inc (JBHT - Free Report) , carrying a Zacks Rank of 3, reported third-quarter 2020 earnings of $1.18 per share, falling short of the Zacks Consensus Estimate of $1.26. Total operating revenues of $2,472.5 million beat the consensus mark of $2,345.2 million.

United Airlines Holdings Inc (UAL - Free Report) , carrying a Zacks Rank of 3, incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $7.63. Moreover, operating revenues of $2,489 million lagged the Zacks Consensus Estimate of $2,570.1 million.

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