It has been about a month since the last earnings report for CSX (CSX). Shares have added about 3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at CSX in Q3
CSX reported third-quarter 2019 earnings of $1.08 per share, beating the Zacks Consensus Estimate of $1.01. The bottom line also inched up 2.9% year over year on lower costs. Following this earnings outperformance, shares of the company rose more than 4% in after-hours trading on Oct 16.
Meanwhile, total revenues of $2,978 million lagged the Zacks Consensus Estimate of $2,980.6 million and also decreased 4.8% year over year. The top line was affected by disappointing performance at the coal and intermodal segments.
Third-quarter operating income was flat year over year at $1,287 million. Operating ratio (operating expenses as a percentage of revenues) improved to 56.8% from 58.7% in the prior-year quarter with total expenses decreasing 8% from the year-ago period. Costs reduced primarily due to increased efficiency and low fuel prices.
Segmental Performance
Merchandise revenues climbed 1% year over year to $1,906 million in the quarter under review. Merchandise volumes were flat year over year.
Coal revenues declined 12% year over year to $516 million in the reported quarter. Coal volumes also contracted 9% year over year due to lower domestic and export coal volumes.
Moreover, Intermodal revenues dropped 11% year over year to $447 million. Volumes also shrank 9% on a year-over-year basis with both domestic and international volumes slipping.
Other revenues too fell 28% to $109 million in the reported quarter.
Liquidity & Share Buyback
The company exited the third quarter with cash and cash equivalents of $1,521 million compared with $858 million at the end of last December. Long-term debt totaled $15,992 million compared with $14,739 million at 2018 end. As of Sep 30, 2019, net cash provided by operating activities was $3,737 million compared with $3,406 million in the year-earlier period.
During the first nine months of 2019, the company repurchased 39 million shares at an average price of $71.11.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
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 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
CSX Corporation (NASDAQ:CSX
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