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CSX to Post Q2 Earnings: Will Cost Headwinds be a Dampener? (Revised)

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·4 min read
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CSX Corporation CSX is scheduled to report second-quarter 2021 results on Jul 21, after market close.

The company has a dull earnings surprise history, having outperformed the Zacks Consensus Estimate in only two of the last four quarters, missing estimates in the other two.

Let’s see how things are shape up for this earnings season.

CSX Corporation Price and EPS Surprise

CSX Corporation Price and EPS Surprise
CSX Corporation Price and EPS Surprise

CSX Corporation price-eps-surprise | CSX Corporation Quote

Factor to Note

CSX’s second-quarter performance is expected to have benefited from higher intermodal volumes owing to strong demand for transportation services due to inventory replenishment and increased volumes from East Coast ports. The Zacks Consensus Estimate for intermodal volumes in the second quarter indicates a 9.8% rise from the first-quarter 2021 reported number. The same suggests a 36% surge from the year-ago reported figure. With this anticipated increase in volumes, the consensus mark for intermodal revenues hints at a 5.3% rise from the sequential quarter’s reported figure and a 37.3% jump from the year-ago reported number.

With improvement in overall freight market conditions, coal and merchandise volumes are also expected to have risen in the to-be-reported quarter. The Zacks Consensus Estimate for coal volumes shows a 1.7% and 37.8% increase from the sequential and the year-ago quarter’s reported figure, respectively. The consensus mark for merchandise volumes hints at a 10.5% and 28.1% % increase from the sequential and the year-ago quarter’s reported figure, respectively. The Zacks Consensus Estimate for total volumes implies a 7.3% and 30.5% rise from the sequential and the year-ago quarter’s reported figure, respectively. The anticipated improvement in volumes is expected to have boosted CSX’s top line in the second quarter.

However, the company’s bottom line might have been hurt by an expected increase in operating expenses due to rise in labor and fringe costs, as well as materials, supplies and other costs.

Earnings Whispers

The proven Zacks model does not conclusively predict an earnings beat for CSX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: CSX has an Earnings ESP of -0.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CSX carries a Zacks Rank #3.

Highlights of Q1 Earnings

In the last-reported quarter, CSX delivered a negative earnings surprise of 2.1%. Moreover, the bottom line declined 7% year over year due to operational disruption as a result of extreme winter weather conditions and lingering effects of the coronavirus pandemic on crew availability. Total revenues surpassed the Zacks Consensus Estimate but dipped 1.5% year over year owing to lower merchandise, coal and fuel surcharge revenues.

Stocks to Consider

Investors interested in the broader Transportation sector may consider United Airlines UAL, Herc Holdings HRI and Alaska Air Group ALK as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

United Airlines has an Earnings ESP of +10.47% and is Zacks #3 Ranked, presently. The company will release second-quarter 2021 results on Jul 20.

Herc Holdings has an Earnings ESP of +1.85% and carries a Zacks Rank #2 at present. The company will release second-quarter 2021 results on Jul 22.

Alaska Air has an Earnings ESP of +39.75% and is currently a #3 Ranked player. The company will release second-quarter 2021 results on Jul 22.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)


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Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report

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