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CSX Q1 Earnings Top Estimates on Favorable Pricing, Stock Up

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CSX Corporation’s (CSX - Free Report) first-quarter 2022 earnings of 39 cents per share beat the Zacks Consensus Estimate by a penny despite the decrease in overall volumes as supply-chain issues continue to hurt results. The bottom line improved 25.81% year over year owing to increased revenues, driven by higher shipping rates.

Total revenues of $3,413 million outperformed the Zacks Consensus Estimate of $3291.2 million. The top line increased 21.33% year over year despite service and hiring-related challenges owing to strong pricing and higher fuel surcharge. The 24% increase in overall revenue per unit more than offset the 2% volume contraction.

The top and the bottom-line beat despite the challenges pleased investors. As a result, the stock gained in after-hours trading on Apr 20 following the earnings report.

First-quarter operating income climbed 6% to $1,282 million. Operating ratio (operating expenses as a percentage of revenues) deteriorated to 62.4% from 60.9% in the prior-year quarter, with operating expenses increasing 24% year over year, mainly due to the 74% rise in fuel expenses. With respect to this metric, lower the value, the better.

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 Performances

Merchandise revenues climbed 6% year over year to $1,921 million in the quarter under review. However, merchandise volumes dipped 2% from the year-ago period’s level, primarily due to a 10% drop in automotive shipments as a result of semiconductor shortage. Segmental revenue per unit increased 7%.

Coal revenues ascended 39% year over year to $533 million in the reported quarter. Coal volumes decreased 10% due to mine disruptions and an outage at CSX’s Curtis Bay export facility.Segmental revenue per unit surged 54%.

Intermodal revenues augmented 13% year over year to $527 million, driven by strong demand. Volumes declined 1% year over year. While the scenario was rosy on the domestic front, softness in the international markets due to supply-chain constraints hurt overall volumes. Segmental revenue per unit increased 13%.

Effective third-quarter 2021, CSX introduced a segment called Trucking comprising the operations of Quality Carriers, acquired by CSX last year. Revenues from the segment totaled $230 million in the first quarter.

Other revenues jumped 41% to $202 million in the reported quarter. The uptick was owing to higher intermodal storage and equipment usage.

Liquidity, Dividends and Buybacks

CSX, presently carrying a Zacks Rank #3 (Hold), exited the first quarter with cash and cash equivalents of $1,936 million compared with $2,239 million at the end of December 2021. Long-term debt totaled $16,019 million compared with $16,185 million at 2021 end.

As of Mar 31, 2022, CSX rewarded its shareholders through buybacks and dividends with $1,016 million and $218 million, respectively.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Outlook

With the demand scenario remaining strong, management expects double-digit growth in the operating income and revenues for 2022 from the respective year-ago reported figures. Impacts from the Virginia real estate transaction are excluded from the assumption. High export coal prices and fuel surcharge revenues are expected to bolster the top line in the near term. CSX still expects capital expenditures to be approximately $2 billion in 2022.

Sectorial Snapshots

Within the broader Transportation sector, J.B. Hunt Transport Services (JBHT - Free Report) and Delta Air Lines (DAL - Free Report) recently reported first-quarter 2022 results. Let’s take a look.

J. B. Hunt’s earnings of $2.29 per share surpassed the Zacks Consensus Estimate of $1.91. The bottom line surged 67.2% year over year on the back of higher revenues across all segments.

Total operating revenues of $3,488.6 million also outperformed the Zacks Consensus Estimate of $3,260.5 million. The top line jumped 33.3% year over year. Total operating revenues, excluding fuel surcharges, rose 27.4% year over year.

Delta’s first-quarter 2022 loss (excluding 25 cents from non-recurring items) of $1.23 per share was narrower than the Zacks Consensus Estimate of a loss of $1.28. With Omicron hampering travel plans in the early part of the first quarter of 2022, the carrier incurred a loss after delivering earnings in the last two quarters of 2021.

However, with the threat of the Omicron variant subsiding, air-travel demand was exceptionally strong in March. Upbeat demand led to DAL earning a profit in the month with the adjusted operating margin reaching almost 10%.


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