Investors in CSX Corporation (NASDAQ:CSX) had a good week, as its shares rose 4.1% to close at US$76.40 following the release of its full-year results. CSX reported in line with analyst predictions, delivering revenues of US$12b and statutory earnings per share of US$4.17, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, CSX's 18 analysts currently expect revenues in 2020 to be US$11.8b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$4.20, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$12.1b and earnings per share (EPS) of US$4.37 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$77.83, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values CSX at US$87.00 per share, while the most bearish prices it at US$52.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
In addition, we can look to CSX's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 0.9% decline next year, compared to a historical decline of 0.06% per annum for the past five years. Compare this with our data on other companies (with analyst coverage) in a similar industry, which in aggregate are forecast to see their revenue decline 6.3% per year. So it looks like CSX is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CSX. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that CSX's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$77.83, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for CSX going out to 2024, and you can see them free on our platform here..
You can also see whether CSX is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.