Shares of Jacksonville, FL-based CSX Corporation (CSX - Free Report) hit a 52-week high of $55.31 per share during the course of the trading session on Jul 5, before retracing a bit to close the session at $55.09 per share.
Notably, the company’s shares have performed impressively in the last three months. The stock has rallied 15.47%, comfortably outperforming the Zacks categorized Transportation - Rail industry’s gain of 7.22%.
Catalysts Behind the Upsurge
CSX Corp. witnessed expansion in volumes across most key segments in the first quarter of 2017. Coal revenues surged 31% year over year to $522 million due to a 3% improvement in volumes. This is encouraging as coal-related headwinds had hurt results for quite some time. Volume growth is expected in the second quarter as well. Driven by improved efficiencies, the company expects the bottom line to increase by 25% in 2017 on a year-over-year basis.
At the 2017 Bank of America Merrill Lynch Conference, CSX Corp. projected a modest increase in volumes in the second quarter. The company stated that second-quarter coal volumes inched up 1% on a year-over-year basis (period considered Apr 1- May 12).
Moreover, CSX Corp. announced an impressive 11% dividend hike in its quarterly payout policy by dint of which, the new quarterly dividend has now risen to 20 cents per share. In another shareholder friendly move, the company’s board has cleared a new $1 billion share buyback program which the management expects to complete by Mar 31, 2018.
Putting all rumors to rest, the company had earlier announced in March that it has inked a deal with Paul Hilal’s Mantle Ridge hedge fund. Per the agreement, CSX Corp. has appointed E. Hunter Harrison as its chief executive officer (CEO) with immediate effect. Harrison’s appointment seems prudent as the company remains focused on enhancing its fortunes. It aims to report an operating ratio in mid-60s by this year-end.
A Broker Favorite
We note that earnings estimates for CSX Corp. have exhibited a healthy uptrend. Over the last 90 days, the Zacks Consensus Estimate of earnings for the second quarter has gone up 7.4% to 58 cents per share, due to multiple upward revisions. Likewise, the Zacks Consensus Estimate for full-year 2017 has jumped 11.11% in the last three months to $2.30 per share.
Given the wealth of information at the brokers’ disposal, it is in the best interests of investors to be guided by their advice and the direction of their estimate revisions, which serve an important pointer in determining the stock price.
CSX Corp. has an attractive VGM Score of 'A'. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrices.
Zacks Rank & Key Picks
CSX Corp. currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are Kansas City Southern (KSU - Free Report) , Norfolk Southern Corporation (NSC - Free Report) and American Airlines Group, Inc. (AAL - Free Report) . While American Airlines flaunts a Zacks Rank #1 (Strong Buy), Kansas City Southern and Norfolk Southern carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Kansas City Southern, Norfolk Southern and American Airlines have rallied 19%, 6% and 23% respectively, in the last three months.
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