It has been about a month since the last earnings report for CSX (CSX). Shares have added about 3.7% in that time frame, outperforming the S&P 500.
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 its most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at CSX in Q4
CSX reported fourth-quarter 2019 earnings of 99 cents per share, beating the Zacks Consensus Estimate of 97 cents. However, the bottom line slipped approximately 2% year over year due to lower revenues.
Meanwhile, total revenues of $2,885 million lagged the Zacks Consensus Estimate of $2,918.2 million and also decreased 8.2% year over year. The top line was affected by lower volumes and coal market adversities.
Fourth-quarter operating income was down 8% year over year to $1.15 billion. Operating ratio (operating expenses as a percentage of revenues) improved to 60% from 60.3% in the prior-year quarter with total expenses declining 9% from the year-ago period. Costs reduced primarily due to increased efficiency and volume-related savings.
Merchandise revenues decreased 3% year over year to $1,860 million in the quarter under review. Merchandise volumes also slid 3% year over year.
Coal revenues plunged 22% year over year to $459 million in the reported quarter. Coal volumes also contracted 17% year over year due to lower domestic and export coal volumes.
Moreover, Intermodal revenues dropped 9% year over year to $449 million. Volumes also shrank 7% on a year-over-year basis with both domestic and international volumes dwindling due to rationalization of low-density lanes.
Other revenues too fell 22% to $117 million in the reported quarter.
Liquidity & Share Buyback
The company exited the fourth quarter with cash and cash equivalents of $958 million compared with $858 million at the end of December 2018. Long-term debt totaled $15,993 million compared with $14,739 million at 2018 end. As of Dec 31, 2019, net cash provided by operating activities was $4,850 million compared with $4,641 million in the year-earlier period.
During 2019, the company repurchased 48 million shares at an average price of $70.54.
For 2019, the company’s earnings of $4.17 per share beat the Zacks Consensus Estimate of $4.16. However, total revenues of $11.94 billion missed the Zacks Consensus Estimate of $11.96 billion. While the bottom line increased 9% year over year, the top line decreased 3%.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months. The consensus estimate has shifted -5.69% due to these changes.
Currently, CSX has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.