U.S. Markets close in 1 hr 43 mins

CSX Q4 Earnings Top on Low Costs, Stock Down on Revenue Miss

Zacks Equity Research

CSX Corporation 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. The revenue miss perhaps disappointed investors. Consequently, the stock dipped more than 3% in after-hours trading on Jan 16.

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.

CSX Corporation Price, Consensus and EPS Surprise

 

CSX Corporation Price, Consensus and EPS Surprise

CSX Corporation price-consensus-eps-surprise-chart | CSX Corporation Quote


Segmental Performance

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

This Zacks Rank #3 (Hold) 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

During 2019, the company repurchased 48 million shares at an average price of $70.54.

Annual Results

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%.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting fourth-quarter 2019 earnings reports from key players like United Parcel Service, Inc. UPS, Union Pacific Corporation UNP and Southwest Airlines Co. LUV. While Union Pacific and Southwest will report earnings numbers on Jan 23, UPS will announce financial results on Jan 30.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See 7 handpicked stocks now >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
CSX Corporation (CSX) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research