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CSX Q4 Earnings Meet Estimates, 2019 Revenue Guidance Soft

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CSX Corporation (CSX - Free Report) delivered fourth-quarter 2018 earnings of $1.01 per share, meeting the Zacks Consensus Estimate. Meanwhile, the bottom line soared 57.8% year over year despite rise in costs.

Total revenues of $3,143 million surpassed the Zacks Consensus Estimate of $3,130.6 million and increased 9.8% year over year as well. Results were driven by a 3% volume expansion, higher fuel recoveries and pricing gains among other factors.

Fourth-quarter operating income augmented 11% year over year to $1,249 million. Operating ratio (operating expenses as a percentage of revenues) improved to 60.3% from 60.7% in the prior-year quarter despite total expenses escalating 9% from the year-ago period.

CSX Corporation Price, Consensus and EPS Surprise


CSX Corporation Price, Consensus and EPS Surprise | CSX Corporation Quote

Segmental Performance

Merchandise revenues climbed 10% year over year to $1,915 million in the quarter under review. Moreover, merchandise volumes increased 4% year over year.

Coal revenues expanded 8% year over year to $586 million in the reported quarter. Coal volumes also grew 3% year over year.

Intermodal revenues rose 4% year over year to $492 million. On a year-over-year basis, volumes inched up 2%.

Other revenues grossed $150 million, up 39% year over year.

Liquidity & Share Buyback

CSX exited the fourth quarter with cash and cash equivalents of $858 million compared with $401 million at the end of 2017. Long-term debt totaled $14,739 million compared with $11,790 million at 2017-end.
At the end of the year, net cash provided by operating activities was $4,641 million compared with $3,472 million in the year-ago period.

The company’s board has authorized a new $5-billion share repurchase program following early completion of the previous one.

2019 Outlook

For 2019, the company expects revenues to improve in low single digits. The projection includes sluggish growth of the intermodal segment due to rationalization of intermodal lanes. Notably, the top line augmented 7% in 2018. The company’s soft outlook pertaining to top-line growth in the year perhaps disappointed investors, causing the stock to slide 2.1% in after-hours trading on Jan 16.

However, on a positive note, the company expects to achieve its operating ratio target of 60% this year itself instead of 2020 expected earlier, on the back of operational efficiency.

Capex for the year is anticipated between $1.6 billion and $1.7 billion.

Zacks Rank & Key Picks

CSX carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Azul (AZUL - Free Report) , Spirit Airlines (SAVE - Free Report) and ArcBest Corporation (ARCB - Free Report) . While ArcBest carries a Zacks Rank #2 (Buy), Azul and Spirit flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Azul and Spirit have gained more than 9% and 35%, respectively, in a year. Meanwhile, ArcBest boasts an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 144.6%.

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