A month has gone by since the last earnings report for CSX (CSX). Shares have lost about 9.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CSX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Earnings Miss at CSX in Q2
CSX reported second-quarter 2019 earnings of $1.08 per share, missing the Zacks Consensus Estimate of $1.11. However, earnings increased 6.9% year over year. Meanwhile, total revenues of $3,061 million lagged the Zacks Consensus Estimate of $3,142.7 million and also dipped 1.3% year over year. Results were affected by disappointing performance of the intermodal segment.
Second-quarter operating income inched up 2% year over year to $1,305 million. Operating ratio (operating expenses as a percentage of revenues) improved to 57.4% from 58.6% in the prior-year quarter with total expenses decreasing 3% from the year-ago period.
Merchandise revenues climbed 2% year over year to $1,944 million in the quarter under review. Also, merchandise volumes inched up 1% year over year.
Coal revenues slid 2% year over year to $557 million in the reported quarter. However, coal volumes grew 2% year over year.
Intermodal revenues declined 11% year over year to $436 million. Volumes also contracted 10% on a year-over-year basis.
Other revenues grossed $124 million, down 9% year over year.
Liquidity & Share Buyback
The company exited the second quarter with cash and cash equivalents of $853 million compared with $858 million at the end of last December. Long-term debt totaled $15,522 million compared with $14,739 million at 2018 end. As of Jun 30, 2019, net cash provided by operating activities was $2,267 million compared with $2,009 million in the year-earlier period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.48% due to these changes.
Currently, CSX has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise CSX has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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