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CSX (CSX) Down 14.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for CSX (CSX - Free Report) . Shares have lost about 14.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CSX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at CSX in Q1
CSX’s 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.
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.
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 Buyback
CSX 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, CSX has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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CSX (CSX) Down 14.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for CSX (CSX - Free Report) . Shares have lost about 14.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CSX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at CSX in Q1
CSX’s 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.
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.
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 Buyback
CSX 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, CSX has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.