Earnings Preview: CSX Corporation

| About: CSX Corporation (CSX)

CSX Corporation (CSX), together with its subsidiaries, provides rail-based transportation services. It offers traditional rail service and the transport of intermodal containers and trailers. The company transports crushed stone, sand and gravel, metal, phosphate, fertilizer, food, consumer, agricultural, automotive, paper, and chemical products; and utility, industrial, and export coal to electricity-generating power plants, steel manufacturers, industrial plants, and deep-water port facilities.

It is scheduled to report its Q2 2012 results on July 17, 2012, after the bell. In this article I will recap the historical results of the company, latest EPS estimates vs. surprises, latest developments and closest competitors' development.

Technical Overview


The stock has a market capitalization of $23.28B and is currently trading at $22.40 with a 52 week range of $17.69 - $26.27. The stock performance year to date: 7.64%. It is currently trading above 20, 50 and 200 SMA.

Key Metrics

  • Trailing P/E: 12.76
  • Forward P/E: 10.87
  • Price/Sales: 1.96
  • Price/Book: 2.74
  • PEG Ratio: 1.33
  • Total Debt: 9.12B
  • Annual dividend yield: 2.20%
  • Return on Equity: 21.74%
  • Return on Assets: 7.71%

Recent EPS Actuals vs. Estimates

In the last quarter it reported $0.43 EPS, beating analyst estimates of $0.38.

The consensus EPS estimate is $0.47 based on 25 analysts' estimates, up from $0.46 a year ago. Revenue estimates are $3.05B, up from $3.02B a year ago. The median target price by analysts for the stock is $27.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On April 16, 2012, the company was downgraded from Buy to Hold at Argus.
  • On March 15, 2012, Barclays Capital reiterated Overweight rating for the company.
  • On January 24, 2012, the company was upgraded from Neutral to Outperform at Robert W. Baird.

Latest Developments

  • On June 25, 2012, CSX Corporation unveiled its 2011 Corporate Social Responsibility (CSR) Report outlining the company's operations, environmental, social and financial performance.
  • On June 1, 2012, CSX Corporation announced its plan to reduce the company's greenhouse gas (GHG) emissions intensity 6 to 8 percent over 2011 levels by 2020, helping to shrink the environmental footprint of freight transportation in America. CSX achieved its previous GHG emissions reduction goal a year ahead of its 2011 deadline, decreasing GHG emissions intensity by 8 percent over 2006 levels by 2010.
  • On May 4, 2012, CSX Corporation has been named one of CivilianJobs.com's Most Valuable Employers for Military, the only Class I railroad on the 2012 list.
  • On April 18, 2012, CSX Corp. furloughed about 280 employees in the first quarter and put about 100 locomotives into storage, in what Chief Executive Michael Ward characterized as a "surgical" response to a big downturn in demand for coal from electric utilities.
  • On April 17, 2012, CSX Corporation announced first quarter net earnings of $449 million, or $0.43 per share, versus $395 million, or $0.35 per share, in the same period last year. This represents a 23 percent year-over-year improvement in earnings per share.
  • On January 23, 2012, CSX Corp. announced the appointments of Oscar Munoz as executive Vice President and Chief Operating Officer and Fredrik J. Eliasson as Executive Vice President and Chief Financial Officer (NASDAQ:CFO), effective immediately.

Competitors

CSX Corp. operates in Railroads industry. The company could be compared to Canadian National Railway Company (CNI), Norfolk Southern Corp. (NSC), RailAmerica, Inc. (RA), and Union Pacific Corporation (UNP). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

CSX ChartClick to enlarge

CSX data by YCharts

Competitors' Latest Development

  • On July 3, 2012, Reuters reported that RailAmerica, Inc., has attracted takeover interest from Genesee & Wyoming Inc., and Watco Companies LLC, according to people familiar with the matter.
  • On June 25, 2012, PS Technology (PST), a wholly owned subsidiary of Union Pacific Corp announced it has acquired the Yard Control Systems division of Ansaldo STS USA. The acquisition boosts PST's robust enterprise management capabilities by adding rail yard process control and automation solutions.
  • On May 23, 2012, RailAmerica, Inc. announced that its Board of Directors is considering strategic alternatives, which may include a sale of the Company. In connection with its evaluation, the Company is engaged in preliminary discussions with third parties regarding a potential sale of the Company.
  • On May 2, 2012, RailAmerica, Inc. announced that it has completed its acquisition of Marquette Rail LLC for approximately $40 million. RailAmerica, Inc. owns and operates short-line and regional freight railroads in North America, operating a portfolio of 45 individual railroads with approximately 7,500 miles of track in 28 U.S. states and three Canadian provinces.
  • On March 2, 2012, Union Pacific Corp announced that its Chairman, President and Chief Executive Officer James R. Young will take a medical leave of absence from his responsibilities as President and Chief Executive Officer while he is being treated for recently diagnosed pancreatic cancer.
  • On February 2, 2012, RailAmerica, Inc. announced that it has signed an agreement to acquire Marquette Rail LLC (Marquette) for $40 million subject to final adjustments for working capital.
  • On February 2, 2012, RailAmerica, Inc. announced that it has signed an agreement to acquire a seventy-percent interest in the Wellsboro and Corning Railroad (WCOR) and Industrial Waste Group (IWG) from Myles Group for $18 million.
  • On February 2, 2012, Union Pacific Corp announced that the Board of Directors has declared a quarterly dividend of $0.60 per share on its common stock, payable April 2, 2012, to stockholders of record February 29, 2012.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.