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Will CSX Q1 Earnings be a Let Down Due to Coronavirus Woes?

Zacks Equity Research

CSX Corporation CSX is scheduled to report first-quarter 2020 results on Apr 22, after the market closes.

The Zacks Consensus Estimate for first-quarter earnings has been revised 1.1% downward in the past 7 days.

Against this backdrop, let’s take a look at the factors that might have influenced the company’s quarterly performance.

We expect CSX’s overall volumes for the to-reported quarter to have been dented by coronavirus-induced supply-chain disruptions. The Zacks Consensus Estimate for total volumes implies a 3.3% decline from the year-ago reported figure.

Notably, intermodal volumes had been weak even before the COVID-19 outbreak and the pandemic is likely to have further complicated matters with imports at the major U.S. retail container ports declining rapidly. The Zacks Consensus Estimate for intermodal volumes indicates a 3.1% decline from the year-ago reported figure.

Additionally, coal volumes are expected to have been soft in the first quarter due to low domestic coal demand. Further, reduced coal volumes are likely to have hurt coal revenues in the quarter. The consensus mark for coal revenues suggests a 21% dip from the number reported in the first quarter of 2019.

However, cost-control measures adopted by CSX courtesy of the precision scheduled railroading model, are expected to reflect on its bottom line. As has been the case over the last few quarters, the company’s operating ratio (operating expenses as a percentage of revenues) is expected to have improved in the first quarter owing to cost-containment initiatives.

CSX Corporation Price and EPS Surprise

 

CSX Corporation Price and EPS Surprise

CSX Corporation price-eps-surprise | CSX Corporation Quote

What Does the Zacks Model Say?

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 a positive surprise. However, that 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 -0.34%. 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 #4 (Sell), currently.

Highlights of Q4 Earnings

In the last reported quarter, CSX’s earnings of 99 cents per share beat 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.

Stocks to Consider

Here are a few stocks worth considering from the broader Zacks Transportation sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Covenant Transportation Group CVTI has an Earnings ESP of +10.00% and a Zacks Rank #3.

Scorpio Tankers STNG has an Earnings ESP of +12.30% and a Zacks Rank of 3.

Golar LNG GLNG has an Earnings ESP of +1100.00% and a Zacks Rank of 3.

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CSX Corporation (CSX) : Free Stock Analysis Report
 
Covenant Transportation Group, Inc. (CVTI) : Free Stock Analysis Report
 
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