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What's in the Cards for CSX Stock This Earnings Season?

Zacks Equity Research

CSX Corporation CSX is slated to report first-quarter 2019 results on Apr 16, after the market closes.

Last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate while total revenues surpassed the consensus estimate. Moreover, both the top and the bottom line improved substantially year over year. Results were driven by a 3% volume expansion, higher fuel recoveries and pricing gains among other factors.

Let’s see how things are shaping up for this announcement.

Factors Likely at Play

Alike the last few quarters, volumes at the company’s fertilizer segment might decline in the first quarter as well, thereby hampering the company’s top-line growth. Additionally, high operating expenses have the potential to affect bottom-line growth.

However, a strong pricing and overall volumes are anticipated to boost results in the quarter to be reported. Also, the company’s increasing operational efficiency should lead to an improvement in operating ratio (operating expenses as a percentage of revenues).

Further, robust performances at the coal and merchandise segments are expected to aid the top line. The Zacks Consensus Estimate for coal revenues in the first quarter stands at $533 million, higher than $503 million reported in the year-ago period. The same for merchandise revenues is pegged at $1,889 million, above $1,779 million reported in the first quarter of 2018.

CSX Corporation Price and EPS Surprise


CSX Corporation Price and EPS Surprise | CSX Corporation Quote

Earnings Whispers

Our proven model does not conclusively show that CSX is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.

Earnings ESP: CSX has an Earnings ESP of -2.33% as the Most Accurate Estimate is pegged at 89 cents, lower than the Zacks Consensus Estimate of 91 cents. 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, which increases the predictive power of ESP. However, the company’s negative ESP leaves surprise prediction inconclusive.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Air Lease Corporation AL, Ryder System, Inc. R and SkyWest, Inc. SKYW as these stocks possess the right mix of elements to beat on earnings in the next releases.

Air Lease has an Earnings ESP of +4.41% and a Zacks Rank of 3. The company will report first-quarter results on May 9.

Ryder is a Zacks #3 Ranked stock and has an Earnings ESP of +3.44%. The company is set to release first-quarter earnings numbers on Apr 30.

SkyWest has a Zacks Rank #2 and an Earnings ESP of +0.83%. The company is scheduled to announce first-quarter financial figures on Apr 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

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