Aggressive · Stocks to Consider and Updates

CSX Beats Earnings Estimates; Revenue Disappoints

Jacksonville, Florida’s CSX Corp. (NASDAQ: CSX – $57.77) announced fourth quarter 2017 adjusted earnings of $573 million or $0.64 per share vs. Street estimates of $0.56/share and last year’s $0.49. Revenue for the period, however, decreased 6% compared to the previous year, to $2.86 billion primarily due to the $178 million impact of an extra fiscal week in 2016 that resulted from the company’s weekly reporting calendar. Analysts were looking for $2.89 billion. Service disruptions from CSX’s operational changes also led to some of the shortfall, as well as lower shipment volumes for vehicles and chemicals. The company’s operating ratio, a closely watched measure of operating costs as a percentage of revenue, fell to 60.9 percent from 67 percent. A lower ratio implies higher profitability.

       The east-coast rail and intermodal carrier’s performance continued to strengthen in the fourth quarter, building upon the restructuring that was instituted by former CEO Hunter Harrison who passed away last month. The new CEO, Jim Foote, said that CSX will continue to carry out Harrison’s precision scheduled railroading model – a strategy to streamline operations and improve efficiency that includes running trains on tight schedules rather than on customer needs. Last week, CSX named railroad veteran Edmond L. Harris as executive vice president of operations. Mr. Harris has more than 40 years’ experience in an operating capacity, including nearly two decades at the Illinois Central and Canadian National railroads, where he worked closely with Hunter Harrison.

       While the shares are fully valued at current levels, I am going to continue to hold my aggressive portfolio position in CSX for longer-term growth.

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