CSX Corp. Looks at Growth and Income

By Alex Kolb

CSX Corp. (CSX) boasts a solid record of exceeding Wall Street forecasts, and analysts are upbeat on earnings going forward. The company’s earnings per share are expected to grow by 17%, ahead of the industry average of 14%. CSX is rewarding shareholders with a dividend yield of 1.6%.

Company Description

CSX Corp. is a transportation company that provides rail, intermodal and rail-to-truck transload services. The company's transportation network spans approximately 21,000 miles, with service to 23 eastern states and the District of Columbia. CSX connects to more than 70 ocean, river and lake ports.

Recent Events

In late September, the company announced that it is expecting a reduction in third quarter operating income by $40 million to $50 million and earnings per share by 6 to 8 cents due to the financial impact of recent storms in the Gulf Coast and Midwest. CSX added that the impact is primarily related to asset write downs, business interruption and reroute expenses. For the 2008 year and longer-term, CSX did not change its outlook.

CSX Hiked its Guidance as did Wall Street

The company boosted its outlook in early September. CSX expects full-year 2008 earnings per share to range between $3.65 and $3.75, up from a previous range that guided toward the upper end of the $3.40 to $3.60.

Analysts have 2008 earnings pegged at $3.67 per share, an increase from last month’s $3.57. The most accurate estimate is a higher $3.69.

CSX noted that based on the strong momentum that is expected to continue beyond 2008, the company also is raising the following long-term guidance through 2010.

Wall Street is forecasting earnings of $4.30 for 2009, a 2-cent upward revision in just 1 week. The most accurate projection is higher at $4.32.

The company’s earnings per share are expected to grow by 17%, ahead of the industry average of 14%.

Rewarding Shareholders

CSX rewards shareholders with competitive income. "With our higher earnings momentum, CSX will continue to generate substantial free cash flow over the long-term," said Oscar Munoz, executive vice president and chief financial officer. "The company remains committed to maximizing value for our shareholders through strategic investment, share repurchases and dividends while maintaining its investment grade profile."

The company offers a dividend yield of 1.6%, which is competitive within its industry group.

Record Growth

CSX announced a record results in the second quarter. Earnings per share from continuing operations increased 31%.

The company saw all-time records in revenues and operating income, which jumped 15% and 17%, respectively.

Comments

[wallyjm:]

rail is the way to go,save fuel and get more trucks off our roads.

2008 Oct 01 11:24 AM