Transportation bellwether CSX reported better than expected earnings Tuesday after the bell. Q4 earnings came in at $0.77 / share, beating estimates by $0.01. Revenues, however, fell 13% year over year to a grand total of $2.3 billion, falling short of the analysts' $2.39 billion consensus. Shares are trading down more than 3% during the after-hours session.
Improvement in the economy is expected to help companies like CSX, and the total volume tally for Q4 seemed to buoy those expectations. Volume fell 7% year over year, the narrowest year over year drop for any quarter last year. Still, lower coal and merchandise shipments weigh on CSX’s ability to grow revenues at a faster rate.
From a technical standpoint, CSX entered a rectangular base in early November that it finally broke out of, on strong volume, on January 8th. However, this proved to be a potentially false breakout, as shares came back inside their former trading range. If shares open Thursday where they are now, they will not only break further down into the old base, but will break the 50-day moving average as well. As a result, I would not recommend beginning a position in CSX unless it can hold its 50-day or the lower threshold of the rectangle delineated below.
Disclosure: No positions in CSX.