East-coast rail and intermodal carrier CSX Corp. (NASDAQ: CSX – $59.78) said its profit in the first quarter doubled while revenue held steady showing that the railroad’s cost cuts and turnaround plan is gaining traction. The company reported adjusted earnings of $695 million, or $0.78 a share, up from $362 million, or $0.39 a year earlier. CSX’s operating ratio for the quarter improved 950 basis points to 63.7 percent compared to the prior year. Revenue for the first quarter edged 0.2% higher at $2.88 billion, while expenses declined 13% year over year or 8% when excluding prior year restructuring charges. Analysts had forecast earnings of $0.66 a share on $2.8 billion in sales. Operating income for the quarter increased 19% when compared to the adjusted operating income of $879 million reported in the first quarter of 2017.
New Chief Executive James Foote has been working to continue a massive turnaround plan started by the late Hunter Harrison last year. The Jacksonville, Florida company has idled hundreds of locomotives, closed rail yards and implemented a new schedule to make its network more efficient, but a rushed implementation caused widespread delays and cost the company some customers.
Shares are trading higher by about 5.7% to a record level following the report. With full-year earnings targeted at about $3.20-$3.25 per share, the valuation remains reasonable at current levels. In addition, the 1.6% dividend yield adds to the company’s total return potential out to 2020.