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CSX (CSX): Q1 EPS of $0.45 beats by $0.05. Shares +2.7% AH. (PR)

CSX (CSX): Q1 EPS of $0.45 beats by $0.05. Shares +2.7% AH. (PR)
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Comments (3)
  • montana1001
    , contributor
    Comments (22) | Send Message
    This is the 15th of the last 17 quarters where CSX bettered expectations. CSX is up 2.85% AH as this goes out. Bernstein's 4/4 warning (saying CNI and NSC would miss estimates and CSX might barely match) prompted me to buy. It's bad news CSX hits estimates, as it did all but 2 of those last 16 quarters?


    I guess you could say we only go in if we're in for the long haul. We might have held off and waited awhile if we had any confidence in our market timer. It's right twice each day. And I get edgy buying at or near highs most of the time. But this is not most of the time. This is one of those rare investing interludes that is mostly macro time. Rails and CSX could crab walk for a quarter or two, but not over an LT horizon, like 1-5 years. Rails are part of the transportation sector, providing cyclical exposure. Recovery in the U.S. is driving more stocks than global recovery aka austerity. (One way to define "laggard" is to compare the S&P500 companies with high global exposure with the stocks that are U.S. sales mostly.) CSX's announced $2.3 billion capital investment in infrastructure is a passable indicator of its confidence in U.S. economic growth generally, and their business, specifically, though managers have reportedly been wrong once or twice. (Think Enron, or Countrywide. No. Don't.) That's on top of $8 billion CSX invested over the last 4 years. (Is this an Amazon story?) (Not. But kinda.) So, when Bernstein spoke, it pushed a move to buy a trailing rail. If CSX hits its earnings estimates, and the other three don't, it seemed that's not likely to hurt. So it turns out.


    CSX is a Tier 1 hauler (one of the 1% of firms that transport 70% of total freight), which protects it from competition given the huge capital entry threshold in the rail business. Which means it can pass on cost increases, like fuel or (perish the thought) inflation. Oil prices going up ends up more a problem for trucking than trains. Overall, highways are getting more clogged up, hurting everyone but trains. Railroads also have fewer labor issues than trucking. Cars are shipping nicely, after a marginally slower 1Q13, as automakers forecast growing 2013 sales and shift manufacturing to the U.S. (and China). As coal went down (-11% 2012, -8.4% YTD nationally; -14% for CSX y-o-y, -16% for CSX YTD), CSX has gone up (+20% YTD). Industrial shipments, like cars (+2.5% YTD), and intermodal volumes (+4% when it presented at the JP Morgan conference 3/6/13) -- which is almost as large as its coal business -- seem to have offset the coal declines. Grains, the 3rd largest rail commodity, are fairly steady, with record planted acreage this year. So far, the strongest growth has been petroleum carloads (+ 56.9% in Ahead of the Tape this morning) and forest products (there's that housing recovery theme again). So RPU grew 3% for merchandise and 2% for intermodal. You've gotta like Michael Ward, the chrmn, Pres., and CEO, though only a red-haired stepchild would be fond of hogging all those titles. It means You Gotta Like The Guy. (Frederick Eliasson, EVP & CFP, joined the 3/14 presentation. Replay available at the usual approximate) He and his earnings letter were fairly upbeat 3/21.


    Meanwhile, CSX has one of the lowest P/Es in the industry, though its price is near its high. We like its 2.3% dividend yield.


    With earnings well over epxectations, the earnings conference call is this morning (4/.17 at 08:30; 1-888-327-6279). Presentation materials and access to the audio webcast will be posted on the company's website at Following the earnings call, a webcast replay and a MP3 audio file will be archived on the company's website.
    17 Apr 2013, 01:42 AM Reply Like
  • gwenie
    , contributor
    Comments (2) | Send Message
    I love trains, I always dreamed about owning a railroad when I played monoply and I own shares in a few! Oh yes!!!!!!!!!!!!!!!!
    17 Apr 2013, 03:41 AM Reply Like
  • nemonemo
    , contributor
    Comments (334) | Send Message
    Thank god. Finally coal production curtailment is confirmed.


    One good thing is met coal export shipment was up 11%.
    17 Apr 2013, 01:48 PM Reply Like
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