1.8% Dividend CSX Corp. Is Seeing Double-Digit Earnings Growth
- CSX saw a +5% revenue gain in Q4 2014 year over year.
- CSX saw a +17% EPS gain in Q4 2014 year over year.
- CSX's outlook cites strength ahead in Q1 2015 and FY2015.
- Analysis of possible weak areas tends to indicate that they are not as weak as many worried. Read further for more detail.
Analyzing The Dividend Growth Potential Of CSX Corp.
- CSX has grown their dividend at a CAGR of 25% over the last 10 years; however, this growth rate is clearly unsustainable.
- Looking over the Annual reports for the last 10 years it can be seen that CSX has achieved this growth rate through increasing cash flows, payout ratios and debt.
- My conservative estimates suggest that CSX will be able to grow their dividend at a sustainable rate of 7% per year over the long term.
CSX - Uneventful Quarter, Long Term Drivers Support The Shares
- CSX reported fourth quarter results which are in line with expectations.
- This business has solid long term growth prospects and expects double-digit earnings growth in 2015.
- Shares offer appeal following these trends especially after a recent pullback amidst potential for industry consolidation.
CSX Corporation: Weakness In Oil Proved To Be No Big Deal
- CSX posted record results due to increases in both volume and average unit price.
- The company's diversified business kept it strong despite weakness in the oil market.
- All in all, the forward valuation is pretty attractive.
Update: Solid Earnings Growth Makes CSX Corp. An Attractive Pick
- The company has reported record fourth quarter and full year results.
- We have previously recommended the stock to income investors, but we feel the growth profile of the company also makes it attractive for growth investors.
- The growth in revenues is in line with our expectations as we explained in our article that the company is on track to grow its revenues.
CSX's Record Fourth Quarter Earnings Are Sending Its Shares Higher - Should You Be A Buyer?
- Q4 2014 earnings were released on January 13.
- Earnings per share met expectations and revenue beat expectations.
- Total shipment volume increased 6%.
- The stock has responded by increasing over 1%.
CSX Earnings Analysis: 26% EPS Growth Predicted For 2015
- CSX reported solid results for the 4th quarter and full year 2014.
- The steady top-line growth is expected to continue while much faster bottom-line growth is possible due to margin expansion, presumably attributable to lower fuel costs.
- CSX, a safe play, now has increased upside potential as well.
Whisper Number Impact: How Will CSX Investors React To Earnings?
- The whisper number is $0.50, one cent ahead of the analysts' estimate.
- CSX has a 69% positive surprise history (having topped the whisper in 29 of the 42 earnings reports for which we have data).
- The overall average post earnings price move is 'as expected' (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.
Uncertainty Shrouds Q4 Earnings Announcement For CSX
- The company recorded a dip of 2.2% in its operating ratio in the third quarter earnings for the current year leaving the ratio at 69.7%.
- The company plans to add 300 new locomotives over the next few years, with the first batch of 100 units being added in the coming year.
- CSX plans to continue sales growth as it has been renewing contracts for 2015 with a re-pricing strategy in mind. The strategy managed to increase revenues by 2.3% in 2013.
- EPS in the upcoming quarterly report will likely stay put at $0.51 while revenues will fail to breach the $3.2 billion mark.
- Annual revenue will float around the $12.5 billion mark and EPS for the year will stay put at $1.87 per share.
Why CSX Would Be A Valuable Addition To Investors' Portfolios
- Railroad operator CSX (NYSE: CSX) has put up a string of solid performances over the course of the last few quarters.
- It is important to note for investors that CSX managed to outperform revenue as well as earnings projections of analysts in Q3 2014.
- The production of crude oil has gone up significantly and thus CSX has benefited hugely from the increase in two way oil cargoes.
- Moreover, trends in the US transport industry are indicating an increasing shift towards rail transport. There have been positive spillovers from excess demand in the trucking industry.
- In order to add further momentum to growth in the upcoming quarters, CSX has made strategic changes which will surely deliver favorable yields for the company.
CSX Corp.: End-Market Improvements And Infrastructure Growth Will Drive Results
- End-market improvements will continue driving CSX Corp.'s growth going forward.
- The situation in the coal and the crude oil markets is improving, as volumes are expected to rise, which means that CSX might get more business.
- CSX is focusing on infrastructure developments to improve capacity and deliver better services to customers.
- CSX is not suitable for Defensive Investors or Enterprising Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is undervalued at the present time.
- The market is implying only 5.49% earnings growth over the next 7-10 years, considerably lower than the rate the company has seen in recent years.
- In the coming periods CSX will be all set to capitalize on the potential growth opportunities.
- The company has taken all the necessary steps to ensure recurring revenues.
- Now is the right time to buy CSX’s undervalued stock before the opportunity vaporizes.
- CSX Q3 earnings report increased operating income but the operating ratio declined by 2.2% for the current year leaving the ratio at 69.7%.
- The company has been renewing contracts for 2015. This will be beneficial for CSX as it has been in the process of renewing contracts with re-pricing on its mind.
- Struggling with coal production and demand, the company lost $800 million in coal revenues over the span of the last two years.
- The rumors of a possible merger with Canadian Pacific Railways Ltd.’s offer have been reportedly turned down by CSX as it might decrease efficiency.
- It is crucial that CSX reduces its expenses and brings its operating ratio down if it wants to beat the competition.
CSX Earnings: Volumes Up But Revenue Per Unit Remains Sluggish
- CSX Corporation improved its performance over the course of the 3rd quarter for the year 2014; the firm recently rebuffed a takeover bid from Canadian Pacific Railway Limited.
- The company posted record performance in terms of revenue, operating income, net income and earnings per share.
- CSX has taken advantage of the boom in the US energy sector and has ridden the wave of economic recovery and industrial growth.
- CSX also showed efficiency in controlling expenses after weather disruptions earlier in the year.
- CSX does represent a worthwhile investment for both short and long term investors.
- CSX will continue to benefit from improving economic conditions, increasing industrial activity, and declining fuel price.
- CSX reported record third-quarter results, has shown significant earnings per share surprise in each one of the last three-quarters, and it has been able to reduce its operating ratio.
- CSX stock has performed very well this year and in 2013, and In my opinion, it still has plenty of room to move up.
CSX: Strong Operating Performance, Guidance And Consolidation Rumors Drive Appeal
- CSX posts strong third quarter sales and earnings.
- The company guides for double digit earnings growth next year as well.
- As consolidation could provide an additional boost to appeal and potential returns.
- Shares of CSX Corp rose in after-hours trading after the company reported strong revenue and earnings growth.
- This confirms my opinion that the business presents investors with attractive prospects but does not change my mind that Norfolk Southern might be a better play down the road.
- In my previous work, I did not anticipate a revenue or earnings beat, but I did claim that the company's potential moving forward is appealing.
Thu, Jan. 15, 6:50 PM
- Shipments of crude oil by rail may be on the decline, but Credit Suisse analysts say that does not hurt the bull case for railroads as the best way to play industrial stocks amid plunging crude prices.
- For all the hype about shipping crude by rail, railroads can still rely on other lines of business, such as transporting general merchandise, the firm says; what's more, capacity is tight, with or without oil.
- Credit Suisse says its three top picks in the group - Canadian Pacific Railway (NYSE:CP), CSX and Union Pacific (NYSE:UNP) - offer an averager 20% upside for their stock prices in the next 12 months.
- CP and UNP are the railroads with the highest exposure to shale oil, with a respective 9.5% and 7.5% of revenues from crude and related products, the firm says; Kansas City Southern (NYSE:KSU) has the least exposure to shale oil, with 3.6% of its revenue tied to oil transport.
Wed, Jan. 14, 7:35 PM
- Crude oil could fall as low as $35/bbl before it might affect the amount of oil flowing out of the Bakken Shale to the east coast, CSX executives said during today's earnings conference call.
- CEO Michael Ward says crude-by-rail represents less than 2% of CSX's total business, but the ~3.5 trains/day used in the transport of crude should stay steady and grow a bit through 2015; he says CSX's business of transporting fracking sand to natural gas drilling areas also should be unaffected.
- Despite falling diesel prices falling, which has made road transport pricing more competitive with rail, CSX execs expect this year it will again gain market share from its highway-bound competition, adding that customers had not expressed any interest in switching.
- In its 2015 outlook, CSX said it expects double-digit EPS growth as merchandise and intermodal volumes grow at a faster pace than the economy and as it increases prices for its services.
Tue, Jan. 13, 4:48 PM
- CSX (NYSE:CSX) says it saw strong growth rates for coal, intermodal, and merchandise in Q4.
- The quarter was strong enough to propel CSX to all-time annual revenue mark of $12.7B.
- Operating ratio +140 bps to 71.8% in Q4.
- Guidance: CSX expects double-digit EPS and margin expansion in 2015.
- CSX +1.01% after-hours.
- Previously: CSX EPS in-line, beats on revenue
Tue, Jan. 13, 4:03 PM
Tue, Jan. 13, 8:19 AM
- A positive outlook on the railroad sector is issued by Cowen Research after a Q4 survey.
- The investment firm notes that the drop in crude shipments in the sector is being offset by pent-up demand in other commodities and capacity pressure in other transportation modes.
- Railroad stocks: UNP, NSC, CSX, CNI, ARII, GBX, CP, KSU, CNI, WAB, TRN.
Mon, Jan. 12, 5:35 PM
Dec. 8, 2014, 3:20 PM
- Another tough day for railroad stocks as oil prices slide again.
- There's been some brave talk that the railroad sector has already seen the developments in the oil industry factored into share prices, but today's action indicates concerns on crude transport is still a concern.
- Decliners: Canadian Pacific (NYSE:CP) -5.5%, Canadian National Railway (NYSE:CNI) -1.7%, Genesee & Wyoming (NYSE:GWR) -2.9%, Kansas City Southern (NYSE:KSU) -2.7%, Union Pacific (NYSE:UNP) -3.1%, CSX Corporation (NYSE:CSX) -2.8%, Norfolk Southern (NYSE:NSC) -3.5%, Pioneer Railcorp (OTCPK:PRRR) -4.3%.
Dec. 4, 2014, 8:58 AM
Nov. 28, 2014, 12:05 PM
Nov. 21, 2014, 5:38 PM
Nov. 7, 2014, 8:46 AM
- Norfolk Southern (NYSE:NSC) +3.5% premarket after Bill Ackman said Canadian Pacific Railway (NYSE:CP) might be interested in a rival to one-time target CSX.
- While Ackman did not name NSC in his comments yesterday, he appeared to have the company in mind by describing his takeover candidate in relation to CSX, as the two carriers go head-to-head in the U.S. east of the Mississippi River.
- “I think something happens,” Ackman said, noting that CP CEO Hunter Harrison believes "pro-competitive" railroad mergers will be permitted by regulators.
Oct. 22, 2014, 5:57 PM
- Railroad stocks were hammered today after some executives threw cold water on the idea that the railroad industry is ripe for consolidation.
- Norfolk Southern (NYSE:NSC) CEO said during today's earnings conference call that he thinks a major merger would be “highly problematic,” since in the past they have led to "significant service problems for some period of time" and potential cost savings such as overlapping routes do not exist as much anymore.
- Yesterday, Canadian Pacific (NYSE:CP) CEO Hunter Harrison confirmed that talks with CSX fell apart after several meetings because they couldn't agree on key issues, and added that a deal with Kansas City Southern (NYSE:KSU) is unlikely because the stock is expensive.
- In today's trade: NSC -3%, CP -1.6%, CSX -0.6%, KSU -2.7%, UNP -1.8%, GWR -2.6%, CNI -0.9%, BRK.B -0.9%.
Oct. 20, 2014, 7:18 AM| Comment!
Oct. 15, 2014, 1:07 PM
- CSX (CSX -2.5%) CEO Michael Ward wasn't taking part in any bubbly speculative talk about railroad mergers during the firm's earnings call this morning.
- The exec says regulators would be very cautious about a large merger due to disruptions in the past after high-profile combinations.
- Earnings call webcast
- Related stocks: UNP, NSC, CNI, ARII, GBX, CP, KSU, CNI.
Oct. 14, 2014, 4:08 PM
Oct. 14, 2014, 4:04 PM
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