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CSX (CSX) Gains But Lags Market: What You Should Know

Zacks Equity Research
Sonic Automotive (SAH) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, CSX (CSX) closed at $66.30, marking a +1.35% move from the previous day. This move lagged the S&P 500's daily gain of 1.56%. Meanwhile, the Dow gained 1.77%, and the Nasdaq, a tech-heavy index, added 2.2%.

Prior to today's trading, shares of the freight railroad had gained 5.3% over the past month. This has lagged the Transportation sector's gain of 9.85% and the S&P 500's gain of 6.41% in that time.

Wall Street will be looking for positivity from CSX as it approaches its next earnings report date. This is expected to be April 16, 2019. In that report, analysts expect CSX to post earnings of $0.92 per share. This would mark year-over-year growth of 17.95%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.01 billion, up 4.55% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.22 per share and revenue of $12.61 billion. These totals would mark changes of +9.9% and +2.94%, respectively, from last year.

Any recent changes to analyst estimates for CSX should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.88% higher. CSX is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, CSX currently has a Forward P/E ratio of 15.5. For comparison, its industry has an average Forward P/E of 16.07, which means CSX is trading at a discount to the group.

Meanwhile, CSX's PEG ratio is currently 1.16. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Transportation - Rail stocks are, on average, holding a PEG ratio of 1.54 based on yesterday's closing prices.

The Transportation - Rail industry is part of the Transportation sector. This group has a Zacks Industry Rank of 92, putting it in the top 36% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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