East coast rail and intermodal carrier CSX Corp. (NASDAQ: CSX – $38.09) said it earned $458 million, equal to an adjusted $0.53 a share in the quarter, compared with $466 million, or $0.48 a share, in the year-ago period. Overall, net income was below a year ago, but an aggressive buyback program helped the rail to a per share profit that beat analysts’ estimates. For the latest quarter, which included an extra accounting week, CSX said coal shipments rose 8.3%. CSX’s metals and equipment business showed the only decline, falling 3.1%. Meanwhile, intermodal traffic, or the moving of shipping containers, grew 4%. Revenue climbed 9.2% to $3.04 billion, beating consensus. The company, however, cited “headwinds” from low commodity prices and strength in the U.S. dollar in 2016, saying it lost almost $470 million in coal revenue alone. For the full year 2016, CSX generated nearly $11.1 billion in revenue as volume declined 5% overall with a 21% decline in the company’s coal business. Even with these ongoing challenges, CSX delivered earnings per share of $1.81, operating income of $3.4 billion and an improved operating ratio of 69.4 percent. CSX also generated record full-year efficiency savings of nearly $430 million in 2016 and improvement in service levels drove strong pricing to support reinvestment in the business.
Jacksonville Florida-based CSX’s on-time performance continues to progress, and customers have shown their appreciation despite price increases. Earnings for this year are expected to be around $2.02 per share. The stock has had a strong run over the past few months and the valuation is getting a little ahead of itself. Nonetheless, I am maintaining my position for now.