East coast rail and intermodal operator CSX Corp. (NASDAQ: CSX – $68.56) announced second quarter 2018 net earnings of $877 million, or $1.01 per share, versus $510 million, or $0.64 per share in the same period last year and fourteen cents higher than Street views. Revenue increased 6% over the prior year to $3.1 billion (better than analysts’ expectations of $2.9 billion), while expenses declined 8% year-over-year or 2% when excluding prior year restructuring charges. Total volumes rose 2% as increases in coal and forest products, including lumber and paper, more than offset declines in fertilizers and agricultural and food products. CSX’s operating ratio, which measures operating expenses as a percentage of revenue and is a closely watched gauge of railroad performance, set an all-time company quarterly record of 58.6%.
Despite sharply higher fuel costs, the company benefited from a number of cost cuts and higher freight rates after a tumultuous 2017. CSX has improved operations by trimming its workforce, reducing service times and running fewer, more fuel-efficient and longer trains under Chief Executive Jim Foote. The measures were initiated by industry turnaround veteran Hunter Harrison, who was CEO when he died in December of last year.
Although the shares are trading at an all-time high, I still believe that the stock has room to run as the economy continues to improve. Aggressive accounts may want to maintain positions here.