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Why Is CSX Up 10.7% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for CSX Corporation (CSX - Free Report) . Shares have added about 10.7% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is CSX due for a pullback? 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 catalysts.

First-Quarter Earnings

CSX Corporation reported first-quarter 2018 earnings of 78 cents per share, surpassing the Zacks Consensus Estimate of 66 cents. Moreover, the bottom line soared 52.9% year over year owing to lower costs.

Also, revenues of $2,876 million outpaced the Zacks Consensus Estimate of $2,826 million. This apart, the top line improved marginally year over year.

First-quarter operating income (on a reported basis) improved 36% year over year to $1,044 million. As the operating ratio (operating expenses as a percentage of revenues) on a reported basis improved to 63.7% from 73.2% in the prior-year quarter, operating expenses decreased 13% (excluding prior-year restructuring charges) from the year-ago quarter. Operational efficiency and volume savings contributed to the decline in expenses.

Adjusted operating income in the first quarter was $879 million. On an adjusted basis, the operating ratio improved 570 basis points.

Segmental Performance

Merchandise revenues slipped 3% year over year to $1,779 million in the quarter. Also, merchandise volumes contracted 8% year over year.

Coal revenues declined 4% year over year to $503 million in the quarter. Coal volumes slid 2% year over year.

However, intermodal revenues rose 3% year over year to $449 million. On a year-over-year basis, volumes remained flat.

Other revenues grossed $145 million, up 96% year over year.

Liquidity

The company exited the first quarter with cash and cash equivalents of $1,980 million compared with $401 million at the end of 2017. Long-term debt totaled $13,768 million compared with $11,790 million at 2017-end.

For the period ending Mar 31, 2018, net cash provided by operating activities was $966 million compared with $1,043 million in the year-ago period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter compared to one lower.

CSX Corporation Price and Consensus

VGM Scores

At this time, CSX has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was also 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth and momentum investors.

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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