Why Earnings Are Not the Only Thing Driving CSX Shares Higher

By Chris Lange Updated Jan 12, 12:49PM EST · Published Apr 20, 11:30AM EDT

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Why Earnings Are Not the Only Thing Driving CSX Shares Higher — © Thinkstock

[cnxvideo id=”625456″ placement=”ros”]When CSX Corp. (NASDAQ: CSX) reported its first-quarter financial late on Wednesday, the company said that it had $0.51 in EPS and $2.87 billion in revenue. That compared with consensus estimates from Thomson Reuters that called for $0.43 in EPS and revenue of $2.76 billion. In the same period of last year, it posted EPS of $0.37 and $2.62 billion in revenue.

Apart from this, the company also announced that it will increase its quarterly dividend by 11% and introduce a new $1 billion share repurchase program. Adjusting for restructuring charges in 2017, these actions are expected to drive a full-year operating ratio, EPS growth of around 25% off the 2016 reported base, and free cash flow before dividends of around $1.5 billion.

In line with the company’s balanced approach in deploying capital, CSX now expects to invest $2.1 billion in 2017, including roughly $270 million for Positive Train Control. Of the 2017 investment, more than half will be used to sustain core infrastructure with the balance allocated to projects supporting profitable growth, efficiency initiatives and service improvements.

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E. Hunter Harrison, president and chief executive, commented on joining the company:

I am pleased to join the CSX team and working together we are going to make this company the best North American railroad, capable of consistently meeting and exceeding the expectations of our customers and our shareholders. As the business environment continues to improve and we implement Precision Scheduled Railroading, CSX will realize these objectives while driving volume growth and achieving a new level of financial performance.

He also added:

Although we are just in the beginning phase of making changes to our network, we are off to a great start. These changes are critical to driving strong, sustainable service for our customers and superior value for our shareholders.

Shares were last seen Thursday up 6% at $49.88, with a consensus analyst price target of $52.58 and a 52-week trading range of $24.43 to $51.27.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.