Industrials

What to Expect From CSX Earnings

Chris Lange

Published: January 12, 2016 12:05 pm

Last Updated: January 13, 2020 3:08 pm

CSX Corp. (NASDAQ: CSX) is scheduled to report its fourth-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $0.46 in earnings per share (EPS) on $2.86 billion in revenue. The same period from the previous year had $0.49 in EPS on revenue of $3.19 billion.

Historically, railroads have been a large part of the U.S. economy, enabling the affordable transport of goods across the continent. Coal has been a staple of what these companies ship for a long time, but the recent weakness in coal calls into question the strength of railroads. One key analyst gave some insight on this predicament and where CSX stands to go from here.

Merrill Lynch downgraded CSX to a Neutral rating from Buy as it increasingly avoids rails with significant coal exposure.

The declines in bulk freight are now compounded by increasingly negative consumer related commodities. The decline in coal has accelerated given reduced domestic and export demand, rising inventories and low natural gas prices. While the decline in coal, crude-by-rail, grain and metals is larger than expected, the surprise is the negative turn at intermodal and forest products, which continue to accelerate downward.

A few other analysts weighed in on CSX prior to the report:

• Deutsche Bank has a Hold rating and a $31 price target.
• BMO Capital Markets have an Outperform rating.
• Barclays reiterated an Equal weight rating with a $28 price target.

So far in 2016, CSX is basically in line with the broad markets, as the stock is down over 9%. However, over the past 52 weeks the stock is down 30%.

Shares of CSX were trading at $23.55 on Tuesday, with a consensus analyst price target of $29.83, with a 52-week trading range of $23.18 to $37.67.