Aggressive · Stocks to Consider and Updates

CSX Beats Estimates; Announces Share Buyback

East coast rail and intermodal carrier CSX Corp. (NYSE; CSX – $63.86) reported quarterly revenue and profit that topped Street views. Revenue for the fourth period increased 10% over the prior year to $3.14 billion, supported by increases in fuel recovery, broad-based volume growth, pricing gains, higher supplemental revenue and a favorable freight mix. Analysts had expected $3.12 billion of revenue in the quarter. Expenses increased 2% from a year ago, when 2017 results are adjusted for the impacts of restructuring and tax reform benefits. Fourth-quarter net earnings were $843 million, or $1.01 per share, versus $0.64 last year on an adjusted basis and two cents ahead of consensus. The company’s operating ratio, a measure of operating expenses as a percentage of revenue and a closely watched gauge of railroad performance, was 60.3% versus 60.7% in the year-earlier quarter. Railroads boost profits by lowering their operating ratio.

       Looking ahead, management expects the operating ratio to drop below 60% on revenue growth in the low single-digit range for this year. Street estimates for earnings per share in 2019 are about $4.25 compared to $3.85 in the year just ended. CSX also said that its board authorized $5 billion in share repurchases, following the early completion of the existing $5 billion authorization. While the stock, up 12 ½% over the past twelve months, has taken a bit of a breather, long-term holdings are still warranted at current levels. The shares also yield investors 1.35%.

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