Jacksonville, Florida’s CSX Corp. (NASDAQ: CSX – $72.20) said third quarter net earnings were $894 million, or $1.05 per share versus the $459 million or $0.51 per share in the same period last year, a 106% increase and ten cents ahead of analysts’ views. The rail and intermodal carrier’s revenue increased 14% over the prior year to $3.13 billion, supported by broad-based volume growth, increases in fuel recovery, favorable mix, higher supplemental revenue and pricing gains. Revenue exceeded Street expectations of $3.05 billion. Expenses declined 2% year-over-year, as expenses associated with increased volume and higher fuel prices were more than offset by efficiency gains as CSX continues to re-engineer its railroading business model. This combination yielded operating income growth of 49% for the quarter compared to the same period last year. The company’s operating ratio (a key benchmark) set a company third quarter record of 58.7 percent compared with 68.4 percent in the prior year; a 970-basis point improvement.
CSX appears in a better position to handle additional volumes than most operators going forward, with most of the heavy lifting done related to the Precision Scheduling Railroad model. Given the positive results for the quarter, full-year earnings should easily surpass the $3.67 per share consensus total for 2018 and $4.10 is likely for next year. Shares, up 34% over the past twelve months, can be maintained in a well-diversified aggressive portfolio.