CSX Reports Solid 3rd Quarter Results
Jacksonville, Florida-based CSX Corporation (NYSE: CSX – $32.61) announced record third quarter net earnings of $509 million, or $0.51 per share, up from $455 million, or $0.45 per share, in the same period last year. The consensus estimate for the east coast railroad was for $0.48. The company’s performance was supported by volume increases of 7%, with broad-based growth across nearly all markets it serves. Revenue of $3.2 billion, an 8% increase over the same period last year, was somewhat better than the $3.15 billion the Street was looking for. Coal volume increased 7% on higher shipments of domestic coal as utilities continued to replenish stockpiles following last year’s colder-than-normal winter. Intermodal shipments, which involve the movement of freight by several modes of transportation, rose 5%. The U.S. transportation sector, hurt by severe winter weather disruptions early in the year, has been rebounding in the past two quarters and CSX said it expects only modest earnings growth for the full year (current consensus is $1.87 vs. $1.85 last year), but anticipates double-digit growth in 2015. Analysts’ are looking for EPS in the vicinity of $2.13 per share next year. CSX Corp., which The Wall Street Journal reported on Sunday had rebuffed a takeover proposal from Canadian Pacific Railway Ltd. didn’t mention the merger proposal in its earnings release. In all, I believe CSX should benefit from the domestic economic recovery given its role in transporting key basic materials required in manufacturing and construction as well as coal and automobile deliveries. The shares can be held for modest, yet fairly predictable, total returns.