|Bid||63.98 x 900|
|Ask||64.59 x 1000|
|Day's Range||64.28 - 66.25|
|52 Week Range||58.47 - 80.73|
|Beta (3Y Monthly)||1.18|
|PE Ratio (TTM)||15.56|
|Earnings Date||Oct 14, 2019 - Oct 18, 2019|
|Forward Dividend & Yield||0.96 (1.45%)|
|1y Target Est||78.74|
CSX (NYSE:CSX) reported weak earnings in mid-July. Since then, the CSX stock price has lost more than 17% of its value. Contrarians thinking of buying on the dip might want to protect their downside by opting for Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).Source: Shutterstock Here's why. The Latest QuarterCSX reported its second quarter of 2019 earnings on July 16.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOn the top line, CSX had revenues of $3.06 billion, 1% less than a year earlier. This figure was also 2.6% lower than the consensus estimate for the quarter. On the bottom line, CSX increased earnings by 7% in the quarter to $1.08 a share. However, it missed the analyst estimate by 2.7%. * 10 Stocks Under $5 to Buy for Fall Although earnings weren't horrible, it was the cut in guidance for the year that sent investors scurrying for the exits. Initially, CSX expected revenue in 2019 to grow 1% to 2%; it now expects revenues to fall by a similar magnitude.CSX's slowdown isn't unique. Most of its peers reported sluggish volume in the second quarter while also missing analyst expectations. It's clear that the U.S.-China trade war is starting to impact the railroad industry.How's it looking over at Burlington Northern Santa Fe, Berkshire Hathaway's railroad subsidiary?Not much better.In the second quarter, BNSF saw revenues increase marginally from $5.88 billion to $5.89 billion with a 2.2% increase in net income. So, it produced similar results. And it's fair to say it too will deliver weaker results in the next two quarters of fiscal 2019.However, with the economy looking like it's about to go into a slow-down mode, Berkshire makes far more sense as a railroad play thanks in large part to the consistent revenue and earnings generation of its insurance business. The Downside Protection of BRKIn the first six months of 2019, Berkshire's insurance unit generated $17.5 billion, 8% higher than a year earlier. On the bottom line, its pre-tax income was $4.08 billion in the first six months. This was 5.6% lower than the previous year, due to higher underwriting losses and loss adjustment expenses.The profitability of the underwriting segment of its insurance business is dictated by the number and severity of claims in a given quarter or period. Sometimes it's going to go in the company's favor; sometimes it won't.However, in the end, Berkshire Hathaway's insurance business is going to generate billions in profits, a luxury that CSX doesn't have.So, if you believe that things are going to get much dicier heading into 2020, CSX stock is far more vulnerable to a market correction than Berkshire. The Bottom Line on CSX StockMy InvestorPlace colleague Luke Lango recently discussed three reasons why now isn't the time to buy despite the fact the CSX stock price has corrected substantially since announcing its earnings.Paraphrasing Luke's comments, railroad fundamentals are weak and aren't expected to improve anytime soon. Secondly, there's nothing particularly noteworthy that stands out about CSX at the moment. Finally, investors have little interest in taking on any more trade exposure than is humanly possible.Lango believes that the slide in CSX stock over the past month could continue given the lack of interest in railroad stocks. I would have to agree.If you have idle cash and are thinking about putting a little of it into a beaten-down CSX stock, I'd opt to either keep it in cash or do the lesser of two evils and buy Berkshire stock.This way, you get railroad exposure while maintaining a good level of diversification.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks Under $5 to Buy for Fall * 5 Stocks to Avoid Amid the Ongoing Trade War * 7 5G Stocks to Buy Now for the Future The post If You Like CSX Stock, Buy Berkshire Hathaway Instead appeared first on InvestorPlace.
Both railroad giants reported earnings last month, but their share-price trends since then have been markedly different.
Zacks Earnings Trends Highlights: Macy???s, Amazon, McDonalds, Caterpillar, CSX Corp., Borg Warner
There's not a lot of mystery at the moment when it comes to railroad operator CSX Corporation (NASDAQ:CSX). CSX news of late has been disappointing, thanks to a soft second-quarter earnings report. That report has pulled the CSX stock price down more than 10% -- and trade worries have kept the pressure on.Source: Shutterstock CSX unquestionably is a solid company -- and, at the moment, the premier railroad operator in North America. That alone creates a strong "buy the dip" argument with the CSX stock price now down 17% from its highs.But there are two key questions here. The first is whether even a 17% pullback is enough given factors outside of CSX's control. The second is whether the "buy the dip" case for CSX stock applies just as well to other, cheaper cyclical plays.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Safe Dividend Stocks for Investors to Buy Right Now From here, the answers to those questions are somewhat of a split decision. I'd wager the CSX stock price will start climbing again. But I'd bet, too, that other stocks -- maybe even some in the railroad industry -- will do better. CSX News Doesn't Change the Long-Term CaseShort-term weakness aside, CSX still has been a star performer. The CSX stock price has almost doubled since the 2016 United States presidential election. Even after the selloff, it has seen the biggest gains of the seven major railroad stocks that comprise the Dow Jones Railroads Index. The 132% increase dwarfs the 104% gains at second-place Norfolk Southern (NYSE:NSC).The company has been excellent at controlling expenses. Its 2018 operating ratio -- operating expenses divided by revenues -- was the lowest in that index, at 60.3%. The two Canadian operators, Canadian National Railway (NYSE:CNI) and Canadian Pacific Railway (NYSE:CP), come in next -- at a full point higher.To top it off, after the disappointing CSX news, the stock now is the cheapest of the group. The forward price-to-earnings ratio sits at 14.5x, slightly lower than NSC. It's possible that multiple will rise -- some analysts may still lower 2020 earnings estimates -- but at the least, CSX is valued in line with the peers it's currently outperforming.Given all these positive factors, the selloff looks like an opportunity. And it's not as if the Q2 earnings report was truly that bad. The company did cut full-year revenue guidance, but it left itself room to outperform if second-half demand strengthens. Operating income still increased 2% year-over-year. This wasn't a disaster, but some investors seemed to treat it as such. The Concerns Going ForwardThe performance of CSX stock so far raises one key and seemingly counterintuitive concern. There simply may not be much room left for improvement.Again, CSX's operating ratio is a full point better than that of every other major railroad play. It's three points better than that of Kansas City Southern (NYSE:KSU), and a full five ahead of Norfolk Southern. Is CSX that much better than the rest of its sector? Or is there more room for rivals to catch up -- and drive earnings growth in the process?That concern becomes more important amid the current cyclical fears. Operating expenses for railroads, like those of any business, can be leveraged by revenue growth. But CSX isn't seeing revenue growth coming in the second half of the year. The obvious worry is that declines may continue if the macroeconomic environment in the U.S. weakens. CSX stock already has a headwind from coal shipments, which may not come back. Its CEO, on the Q2 conference call, called the macro picture "puzzling."If the economy turns, revenue growth may head south for more than just a couple of quarters. And it may be CSX whose growth and share price lags, as rivals find more room to cut costs in the new environment. Is CSX Stock the Best Play?Those concerns are real. But at 14x-15x forward earnings, they look priced in. At this point, the declines do seem like they've gone too far.But, again, the other important question is whether CSX stock is the best play. And that's a tougher case to make. Cyclical stocks across the board generally have struggled since the beginning of last year, even though many have rallied somewhat so far this year. And many are downright cheap.Caterpillar (NYSE:CAT), for instance, trades at 10x forward earnings. Many other stocks in industries like construction, boating and automobiles look even cheaper. The risks in those sectors are higher -- but so are the rewards. If an investor has the stomach to make a contrarian bet against the current macro worries, there are options that go beyond CSX and beyond railroads.So from here, the case for CSX stock looks solid but also a bit narrow. It's for investors who are willing to take on cyclical risk -- but only a little. Long-term, the selloff is an opportunity. But the same factors that drove the selloff could open up intriguing opportunities elsewhere.As of this writing, Vince Martin did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post CSX Stock Is a Good Play -- But Is It the Best One? appeared first on InvestorPlace.
Companies with better representation of women in their workforce, and their senior ranks, see better share price returns than those who don’t, according to new research.
It's fair to say that over the past month, CSX (NASDAQ:CSX) has come off the rails. During the past month, CSX stock sunk as the transportation giant reported miserable second-quarter numbers in mid-July.Source: Shutterstock Revenues missed expectations by a wide margin, the biggest miss since early 2016. Earnings also missed expectations by the widest margin in the past five years. More important, the full-year guide was cut sharply to well-below consensus levels.Ever since, CSX stock has dropped nearly 20%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSome contrarian investors might see this big drop in CSX as an opportunity to buy into a company that ostensibly seems very stable. But, while I love to play the contrarian, I don't think buying the dip in CSX here is the right move. * 7 Safe Dividend Stocks for Investors to Buy Right Now The reality is that CSX stock has come off the rails, and there's no reason to step in the way of this "off the rails" train just yet. The fundamentals are weak and will likely get worse before they get better. The optics are ugly and won't improve anytime soon. Meanwhile, the analyst community is growing increasingly bearish and won't provide any support; neither will the technicals, since CSX has blown through pretty much all of its important technical and psychological levels.In sum, then, there's no reason to step in the way of this sell-off just yet. Instead, the smart move here is let this sell-off play out, and then buy the dip once the fundamentals, optics, and technicals become more supportive of a rebound rally. The Rail Industry Is off the RailsThe 20% plunge in CSX stock over the past month is not unique to this specific company. Instead, it is part of a more wide-sweeping sell-off across the entire rail industry.Alongside CSX, peer rail transport companies Norfolk Southern (NYSE:NSC), Union Pacific (NYSE:UNP), and Trinity (NYSE:TRN) all reported Q2 revenue misses with sluggish volume growth. All four stocks have fallen 8% or more over the past month.Under the hood, the trade war is having a materially negative impact on the U.S. manufacturing sector. When the manufacturing sector slows, demand for rail transport slows, too, since companies are responding by transporting less volume, less frequently.When volumes drop, margins take a hit because costs aren't coming out of the system as quickly as volumes are dropping. Further, this pain may just be beginning. The trade war has escalated over the past few weeks, and as it has, it's become increasingly clear that elevated trade tensions and slowing manufacturing activity are here to stay for the foreseeable future.As such, the outlook for CSX and the entire rail industry over the next several months is sluggish volume growth alongside potential margin compression. That's a losing combo. No Reason to Buy the Dip YetAt some point, this dip in CSX becomes a compelling buying opportunity, since CSX is a stable company with healthy long term growth prospects.But, that point isn't here yet. Instead, at the current moment, there's very little reason to step in the way of this CSX stock sell-off.First, as outlined above, rail industry fundamentals aren't good now, nor do they project to improve anytime soon given trade war escalation. Second, CSX isn't a standout in this industry. Instead, they've been hit like everyone else during this rail slowdown, reporting negative revenue growth last quarter.Third, the optics here are bad. Investors quite simply do not want trade war exposure at the current moment. CSX stock has a ton of trade war exposure. As such, it is unlikely that investors will be attracted to the stock anytime soon.Further, analysts are cutting estimates and the number of Buy recommendations on the stock has dropped from 11 at the beginning of the year, to five today, according to YCharts. Thus, there isn't much support from the analyst community, either, and without that support, investors likely aren't inclined to buy the dip in bulk.Fourth, the technicals are broken. During this most recent sell-off, CSX blew through its 20-day, 50-day, and 200-day moving averages without any regard for those technical support levels. The next psychological level of support comes in at $65, where the stock has shown resilience before. Until the stock does show support there, there's little reason to believe that there's much technical support in this stock anywhere.Overall, there's simply very little reason to step in the way of this sell-off today. It increasingly appears that there's more pain ahead for CSX. Investors should only buy the dip once it appears that the worst has passed. Bottom Line on CSX StockThings are bad at CSX right now. The unfortunate reality is that things will probably get worse before they get better. That means that the recent 20% plunge in CSX stock isn't an opportunity. Instead, the stock will likely sell-off more before it bottoms.As such, now isn't the time to buy the dip in CSX stock. Rather, it's time to steer clear.As of this writing, Luke Lango did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Run Away from CSX Stock as It Comes Way off the Rails appeared first on InvestorPlace.
Public railroad stocks can be especially attractive in a growth economy. Few industries are as closely tied to economic growth as those involved in moving goods and commodities. Railroad stocks have seen some volatility over the past few years, due in part to the falling fortune of coal, which accounts for nearly 40% of America's railroad tonnage.
CSX, Caterpillar, JPMorgan, Macy???s, Wal-Mart, Deere & Co., Nvidia and Applied Materials are part of Zacks Earnings Preview
MONTREAL and JACKSONVILLE, Fla., Aug. 08, 2019 -- CN (TSX: CNR) (NYSE: CNI) and CSX (NASDAQ: CSX) are pleased to announce a new intermodal service offering between CN’s.
Recently, there was some CSX news that I found interesting. In Kentucky some coal miners decided that it would be a good idea to blockade a train that is owned by CSX Corp (NYSE:CSX). Apparently they were doing this in protest of the fact that they hadn't been paid in a month following the bankruptcy of their employer, Blackjewel LLC. Source: Shutterstock This news really shouldn't -- and didn't -- have any direct effect on the price CSX stock. However, I am a Wall Street history junkie. Railroads and labor unrest have been a big part of its history, so this headline definitely got my attention.Analysis of the railroad stocks can potentially give great insights due to their economic sensitivity. With all the talk about trade wars and a possible recession coming, I decided to take a closer look at CSX and its most recent earnings report.InvestorPlace - Stock Market News, Stock Advice & Trading Tips 2019 Second Quarter HighlightsOn July 16, CSX released its second-quarter 2019 earnings report. Investors were clearly not happy. The CSX stock price dropped by more than 10% in just one day. Earnings were $1.08 versus analysts estimates of $1.11. Revenue was $3.06 billion while the Street was looking for $3.14 billion. On the surface, this seems a little light, but really not all that bad. So what is going on here? * 10 Stocks to Buy on the Trade War Dip What likely caused the most concern among shareholders was the fact that the company revised its fiscal year 2019 revenue guidance downward. It now sees a 1%-2% decline for the year. This is significantly below the previous guidance of being up 2%.In my opinion, what was probably even more concerning to shareholders were some cryptic comments that were made by the CEO. "The present economic backdrop is one of the most puzzling I have experienced in my career," said Chief Executive James Foote. Coming from a seasoned industry veteran with more than 40 years experience, it isn't surprising that some astute investors took this as this as a reason to head for the exits.Some would argue that bearish indications for CSX were starting become apparent last year. For example, between 2017 and 2018, net income dropped from $5.47 billion to $3.31 billion. As a result of this, annual earnings fell from $5.98 to $3.84 per share. Both of these declines were significant. What Is Next for CSX Stock?I think that as long as there is economic uncertainty and growing concerns about a potential recession, CSX stock will continue to trend lower. Railroad companies tend to be very sensitive to the economy, so there will be some headwinds facing the company.If CSX does continue to head lower and you are considering buying it, you may want to consider pulling the trigger if it gets back down to the levels around $60. This is where the stock found a bottom during last Decembers stock market rout. Because of this these is a good chance that these levels will be support again.As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on the Trade War Dip * The 5 Highest-Rated Dow Stocks Right Now * 4 Cybersecurity Stocks to Buy for Long-Term Gains The post CSX Stock May Become a Buy, But Not Just Yet appeared first on InvestorPlace.
Today we'll evaluate CSX Corporation (NASDAQ:CSX) to determine whether it could have potential as an investment idea...
(Bloomberg Opinion) -- To get Brooke Sutherland’s newsletter delivered directly to your inbox, sign up here.A General Electric Co. earnings release is never a straightforward event; Wednesday’s felt particularly inconclusive. Turnarounds are prone to fits and starts, and at GE, it’s apt to be a particularly long and difficult road. There was little in the latest quarter’s results to convert doubters of CEO Larry Culp’s recovery efforts into believers, and, similarly, nothing concretely terrible enough to shake supporters out of their faith. On the positive side, there were signs of stabilization in the struggling power division. The unit posted operating profit of $117 million in the quarter, down significantly from a year earlier but hey, it wasn’t a loss. Orders were up 28% on an organic basis in the gas turbine side of the business. Also, GE raised its adjusted industrial cash flow guidance and now sees the potential to actually generate as much as $1 billion for the full year. That compares with a previous call for cash flow to be at best breakeven in 2019.It’s not really clear how we got to that raised guidance, though. GE says the improved outlook reflects better-than-expected first-half results for power and health care, and lower restructuring expenses and interest costs. It now says cash flow for the power business could be flat relative to last year’s $2.3 billion burn (adjusted for the reallocation of the grid operations to the renewable energy division), versus an earlier forecast for a substantial year-over-year weakening. Gordon Haskett analyst John Inch estimates a $500 million boost to expectations for the power unit. GE also said it thinks it can spend $500 million less on cash restructuring this year, while still achieving the same level of cost savings. This is odd. Recall that Culp’s predecessor John Flannery was ousted in part because of a perceived lack of urgency and aggression on cost-cutting. Analysts have debated how much more cost-cutting GE could actually do, given already comparatively low levels of back-office and R&D expenses and relatively high sales per employee. The European footprint GE inherited from the Alstom SA deal also complicates its efforts to fire people and shutter factories. For me, the lower restructuring bill raises questions as to whether the multi-year cost-cutting opportunity is as large as billed.Either way, working against the better power performance and lower restructuring expenses is GE’s estimate of a $1.4 billion hit to 2019 cash flow from operating activities if Boeing Co.’s 737 Max stays grounded through the duration of this year, a likely outcome at this point. GE provides the engine for the Max through its CFM International joint venture with Safran SA. One possible explanation is that Culp was trying to give the company room to fix itself in 2019 and set a low enough bar with his initial guidance that he could simply roll over it. Given GE’s past history with over-promising and under-delivering, I can’t knock the logic of this rationale. But if that is the case, it feels a little too carefully orchestrated. Why give guidance at all really if you’re going to be uber-conservative and continue to rely on heavily adjusted metrics? Why not let the results and the turnaround speak themselves? Perhaps the optics of a potential “beat” proved irresistible. It doesn’t change the fact that GE is losing some of its cash-generating ability through divestitures and likely to face historically low levels of cash flow for the next few years. One thing that seemed notably less carefully orchestrated was the announcement that Chief Financial Officer Jamie Miller would be stepping down. In an interview with Bloomberg News, Culp said this was his decision and he felt the time was right because “things were stable enough.” That suggests it’s a change he’s been contemplating for a while and was just waiting for the proper moment, which makes it all the weirder that GE announced the reshuffling without having a replacement lined up.NEVER-ENDING TARIFFS So much for the doldrums of August. President Donald Trump kicked off the typically quiet month by announcing the U.S. would slap 10% tariffs on $300 billion of Chinese imports not yet subject to duties because he doesn’t feel Chinese President Xi Jinping is moving “fast enough” to resolve trade tensions. The tariffs are set to take effect Sept. 1 and Trump has said he may even raise the duties to 25% or higher if talks with China continue to stall. The direct cost of this latest batch of tariffs will likely be incremental for industrial companies, with many of the products and components they import from China included in the $250 billion of goods already taxed by the Trump administration at 25%. It’s a much nastier surprise for consumer-goods companies like Apple Inc., which thus far have managed to stay out of the fray, and for the average American who’s about to see higher prices on some of their favorite toys and electronics. My Bloomberg Opinion colleagues Shira Ovide and David Fickling have great pieces out on this, which you can read here and here. But for manufacturers, this adds to a general environment of uncertainty that CSX Corp. CEO James Foote deemed “one of the most puzzling” economic backdrops of his career. With China reportedly contemplating blacklisting FedEx Corp. over the erroneous rerouting of packages involving Huawei Technologies Co. documents and products, Trump’s latest trade broadside could inspire retaliation against other U.S. companies. The slide in Boeing shares on the tariff news suggests investors are worried about backlash toward the planemaker, whether through canceled or scrapped orders or a tougher regulatory review of its grounded Max jet. More tangibly, this re-escalation of the trade war means the sales slowdown that was a frequent theme this industrial earnings season is unlikely to dissipate and instead set to get worse.This week brought more evidence of weakening demand from nVent Electric Plc, Gardner Denver Holdings Inc., Parker-Hannifin Corp. and even Siemens AG’s automation software business. The Institute for Supply Management’s gauge of U.S. manufacturing activity came in at 51.2 for the month of July, according to data released Thursday. That’s still indicates expansion, but it’s the fourth straight month of declines and the lowest reading in nearly three years. Thus far, manufacturers have generally been successful at passing along price increases and that, combined with stepped-up cost-cutting, has helped companies deliver earnings beats even as their sales growth slows. The durability of that dynamic will be tested if this wobbling in demand turns into a more clear-cut slump. There had been some hope that a Federal Reserve interest-rate cut would buoy the sector. Whatever push toward new investment may have been inspired by this week’s quarter-point reduction is likely now wiped out by this reopening of the trade-war tensions. Of course, there’s also the possibility that this tariff threat was Trump’s way of forcing the Fed into more rate cuts. Maybe it’s a bluff, like the threat to impose tariffs on all Mexican imports. Who knows? Meanwhile, the bright spots this week were strong numbers from Ingersoll-Rand Plc and Johnson Controls International Plc, which both posted much better organic sales and order growth for their HVAC businesses than we saw earlier in the reporting season from United Technologies Corp.’s Carrier unit and Lennox International Inc. We’ll see if that lasts. ROUNDING UP MORE PLAINTIFFSBayer AG is now facing lawsuits from 18,400 plaintiffs claiming the company’s Roundup weed killer caused their cancer; that represents an increase of 5,000 litigants since April. In a call this week to discuss disappointing quarterly earnings, Bayer CEO Werner Baumann moderately walked back the company’s resistance to settlement talks, saying he’d be open to a “financially reasonable” agreement as long as it resolves all Roundup litigation. The continued buildup in the number of claimants makes it less likely a settlement will meet both those criteria. Last month, a judge reduced a $2 billion jury award to a California couple to $86.7 million, following similar payout reductions in the other two Roundup cases that have gone to trial. But a lawyer representing that California couple noted that the average judgment per plaintiff now sits at $47 million. Every case is different and the awards per plaintiff are likely to be lower in a mass tort settlement, but that’s still a troubling precedent. Analysts’ estimates for a Roundup settlement range from $2.5 billion to $20 billion. Bloomberg Intelligence’s Holly Froum estimates $6 billion to $10 billion, given the surge in lawsuits, and said she’s skeptical a settlement would remove Roundup litigation risks for Bayer as non-parties who may claim injury in the future wouldn’t be bound to it. While Bayer agreed last month to sell the Dr. Scholl’s foot-care business to Yellow Wood Partners for $585 million and is looking to offload its animal-health business, the uncertainty surrounding the Roundup litigation likely limits its ability to consider a bigger breakup.DEALS, ACTIVISTS AND CORPORATE GOVERNANCEEaton Corp.’s second-quarter results released this week did little to endear analysts and investors to its current structure. While the company’s aerospace and electrical divisions put up strong numbers despite currency pressures and a more challenging economic environment, the hydraulics and vehicle units were disappointments, yet again. Eaton now estimates organic growth in the hydraulics business will be flat to up 1% for the full year, down from a previous guide of 3% to 4%. Margin expectations for that unit were also slashed. In the vehicle division, Eaton sees as much as an 8% decline in organic sales this year. Asked by Goldman Sachs Group Inc. analyst Joe Ritchie about the hydraulics unit’s long-term fit within Eaton’s portfolio, CEO Craig Arnold pointed out that the company’s overall performance was solid “despite the fact that we have one of our businesses that's not today firing on all cylinders.” That’s true, and yet while I’m wary of industrial companies’ passion for breakups going too far, “despite” is really the key word in Arnold’s comments. This isn’t a momentary slip-up for either the hydraulics or the vehicle business, and they’re increasingly perceived as more cyclical roadblocks holding up even greater margin improvement and sales growth for the overall company. Arnold has signaled in the past that if the company can’t get struggling businesses to targeted profitability levels, that could be a catalyst for divestiture.Parker-Hannifin agreed to buy Exotic Metals Forming Co. for $1.73 billion. The name might lead you to believe this company crafts metalworks on some sort of tropical island, but it’s based in Washington and makes complex high-temperature engine components and exhaust-management systems for aircraft including the Boeing 737 Max and Lockheed Martin Corp.’s F-35 fighter jet. On the one hand, the addition of Exotic Metals will boost the share of Parker-Hannifin’s revenue tied to faster-growing, more profitable aerospace products to more than 20% by Bloomberg Intelligence’s estimate, which will help to offset the sales slowdown in its industrial-products divisions. At about 13 times 2019 estimated adjusted Ebitda, the Exotic Metals deal is cheaper on that basis than the $3.7 billion acquisition of adhesives and coatings company Lord Corp. that Parker-Hannifin announced earlier this year. But this is another debt-fueled bet on the aerospace industry at a time when skepticism is growing about how much longer the multi-year boom in that sector will last. Exotic Metals’s already high Ebitda margin of nearly 30% and compound annual sales growth of more than 16% over the last three years leave little room for improvement. A goal of a high single-digit return on invested capital in year five for the Exotic Metals deal isn’t terribly impressive to begin with; the risk is, even that is optimistic. nVent agreed to buy Eldon, a Spanish provider of electrical enclosures, for $130 million. This is nVent’s first takeover of size since the company was spun off from Pentair Plc in 2018. It’s a good deal for CEO Beth Wozniak to start with: the purchase price is a reasonable 1.4 times the $90 million of sales Eldon generated in 2018 and the business is clearly complementary to nVent’s existing electrical protection systems. Eldon will give nVent more products that adhere to European electrical standards, giving it access to a wider swath of customers, RBC analyst Deane Dray wrote in a report. Eldon is also a bit ahead of the curve on automation and digital initiatives and the deal could help speed nVent’s efforts in those areas. In that respect, the Eldon purchase may serve to make nVent a more well-rounded takeover target in its own right, Dray writes. BONUS READINGRegulators Found High Risk of Emergency After First Boeing MAX Crash Bad Week for Energy Stocks? Wait Till Next Year: Liam Denning Shareholders Voted Them Off the Board, But the Board Said No Helicopter Bankruptcy Highlights Surprise Medical Bill Backlash Ford Acquires Defense Contractor to Get Robot Rides on the RoadAston Martin Is Struggling to Stay on the Road: Chris Hughes(Corrects second paragraph to show that the Gordon Haskett estimate is $500 million, not $500 billion.)To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Due to CSX's (NYSE:CSX) earnings and revenue miss, many analysts and pundits have begun to take a more bearish view of CSX stock. With its 2019 revenues set to fall 1%-2%, according to its own estimates, CSX could face a rough ride. Also, the trade war with China and signs of an economic slowdown have weighed on CSX's freight volumes and intermodal transport business.Source: Shutterstock The low cost of rail transport has and will continue to bolster CSX's business model in the long-term. However, falling revenues and economic headwinds look positioned to derail CSX stock for the foreseeable future. * 8 of the Most Shorted Stocks in the Markets Right Now CSX Stock Price TumbledOn July 16, CSX stock price fell by more than 10% following the company's earnings. The company's earnings and revenue fell short of analysts' average expectations. Moreover, the company's guidance also came in below the average estimate. CSX expects its revenues to come in 1%-2% lower than last year's revenue of $12.25 billion or between $12 billion and $12.13 billion. The average revenue estimate had previously stood at $12.47 billion.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe negative sentiment spread across the railroad industry. Union Pacific (NYSE:UNP), Kansas City Southern (NYSE:KSU), and Norfolk Southern (NYSE:NSC) also plunged on July 16. The sellers appear to have made the right call. Norfolk Southern's earnings subsequently came in below analysts' average estimates, while Union Pacific's top line missed the consensus outlook. The Economic Cycle Bodes Poorly for CSX StockIn a previous article,I predicted that guidance would likely determine the near-term performance of CSX stock. Since the company had already cut its revenue guidance in January, issuing lower guidance a second time destroyed the confidence many had in CSX stock.Additionally, CSX and its peers serve as a proxy for the overall economy. As InvestorPlace columnist James Brumley stated, there is now widespread concern that the economy is slowing.The Fed attempted to address this issue with a cut in interest rates recently. Before this cut, the Federal Reserve had not reduced rates since soon after the 2008 financial crisis. So far, the Fed's move has failed to rejuvenate CSX stock.CSX stock price traded above $71 per share before the cut. Since it occurred, the stock fell for the rest of the week. As of this writing, the CSX stock price now stands at about $66.50 per share.Moreover, InvestorPlace columnist Josh Enomoto points out that CSX stock dropped massively during the 2000 tech bubble and the 2008 financial crisis. During both downturns, CSX stock price lost more than two-thirds of its value. If rate cuts fail to head off an economic slowdown, I wouldn't be surprised if history repeats itself.I do not necessarily believe that the CSX stock price will fall by two-thirds again. However, it may be vulnerable enough to justify selling the equity. Traders have few reasons to ride out such a downturn. The Bottom Line on CSX StockRail remains the lowest-cost means of transporting freight. For this reason, I like the railroad industry in general, and I think CSX stock will deliver returns over the long-term.But at this stage, I see more to lose than gain by holding CSX stock at these levels. When investors sour on CSX stock, history has shown that they turn on it hard. The recent rate cut did not boost CSX stock price, and the stock began a new downward move following the news.That does not mean traders should stop paying attention to this company. I think CSX stock will be a great buy during the depths of a recession. However, in the late stages of an economic expansion, traders should stay off the tracks, since for now, CSX is much more likely to report negative news than positive metrics.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Small-Cap Stocks to Buy Before They Grow Up * 7 Stocks to Buy With Over 20% Upside From Current Levels * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk The post CSX Stock Will Likely Continue to Fall Amid Economic Uncertainty appeared first on InvestorPlace.
(Bloomberg) -- Senate Majority Leader Mitch McConnell sided with coal miners in Kentucky who blockaded a CSX Corp. train after going without pay for a month following the bankruptcy of their employer, Blackjewel LLC.The Kentucky Republican “believes strongly these miners should be paid in full for their work” and is following the situation closely, a representative for McConnell said via email on Thursday.The miners have been working in shifts to block railroad tracks leading to a Blackjewel mine outside Cumberland, Kentucky since Monday afternoon, Harlan County Judge-Executive Dan Mosley said in an interview. They’re demanding back pay for work done in weeks leading up to the bankruptcy, after checks issued by Blackjewel bounced or never arrived, Mosley said.CSX confirmed in a statement that it retrieved two locomotives from the blocked coal train Wednesday and that the company is “hopeful that a quick resolution can be reached.”Representatives for Blackjewel didn’t immediately provide a comment.In a letter to employees posted Tuesday to its claims noticing website, Blackjewel said it’s “doing everything possible to bring as many employees as possible back to work as quickly as possible.”In bankruptcy papers, the company estimated on July 1 it owed $4.5 million in back wages, and some who have been called back to work have been paid. Blackjewel said on July 8, “We fully intend to pay our employees the amounts owed for work completed prior to the Chapter 11 filing as we bring our employees back to work.”The case is Blackjewel LLC, 3:19-bk-30289, U.S. Bankruptcy Court for the Southern District of West Virginia (Huntington)To contact the reporter on this story: Jeremy Hill in New York at email@example.comTo contact the editors responsible for this story: Rick Green at firstname.lastname@example.org, Nicole BullockFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.