) reported fourth quarter 2012 earnings of 43 cents per share,
ahead of the Zacks Consensus Estimate of 39 cents and in line
with the year-ago quarter. For the full year, earnings per share
leaped 7% year over year to $1.79.
The company's fourth quarter revenues of $2,884 million
remained marginally below the Zacks Consensus Estimate of $2,886
million and declined 2% year over year due to lower volume,
partially offset by higher pricing and fuel surcharge recoveries.
Revenues for the year remained flat year over year at
Fourth quarter operating income was down by 4% at $804
million, resulting in operating ratio (defined as operating
expenses as a percentage of revenue) that increased 60 basis
points year over year to 72.1%. Operating expense inched up 1%
year over year to $2,080 million.
For fiscal 2012, operating income rose 1% year over year to
$3,457 million resulting in an operating ratio of 70.6%, down 30
basis points. Operating expense remained flat year over year at
Performance Across Business Lines
revenues increased 4% year over year to $1,661 million in the
reported quarter driven by 5% increase in revenue per unit (RPU).
However, volumes for the segment registered a 1% year over year
decline given significant drop in Agricultural Products (down
12%), Metals (down 7%) and Emerging Markets (down 6%) on a
year-over year basis.
revenues were down by 18% year over year at $747 million on 19%
volume declines. RPU remained flat on a year-over-year basis.
The poor performance by Coal was due to lower domestic coal
shipments given lower electrical generation, higher utility
stockpiles and low natural gas prices. Export coal also suffered
a significant setback due to lower shipments of U.S.
metallurgical coal to overseas markets.
revenues rose 6% year over year to $398 million driven by
highway-to-rail conversions in the domestic market, increase in
service lanes and increase in existing customers. International
intermodal business also performed well given the rise in
customers, offset by disruptions by Hurricane Sandy. On a year
over year basis, Volumes and RPU increased 4% and 2%,
revenues were $78 million, up 25.8% year over
The company exited 2012 with cash and cash equivalents of $784
million compared with $783 million in the year-ago period.
Long-term debt increased to $9,052 million from $8,734 million in
the year-ago period. The company repurchased approximately 34
million shares worth $734 million in 2012 against 67 million
shares worth $1.6 billion during 2011.
Other Railroad Stocks
Besides CSX, other railroads that released their fourth
quarter earnings include
Norfolk Southern Corp.
). Both the companies surpassed their Zacks Consensus Estimates.
While Norfolk Southern registered a year-over-year decline
in its earnings, Kansas registered a substantial growth over the
Other stocks worth considering within the sector is
Genesee & Wyoming
) that holds a Zacks Rank #1 (Strong Buy).
CSX Corp. delivered a stable financial performance in its
fourth quarter amid economic worries that influenced demand
trend. Lower volumes continued to adversely affect quarterly
results but the bright spot for the company remained pricing
improvements. This highlights the growing significance for
rail-based freight transportation services compared to other
freight transportation services.
We expect the company to remain focused on growth across most
of its products lines, in particular in Intermodal and
Merchandize markets, which remain the key revenue drivers over
the near term. However, we remain cautious on the stock due to
the company's capital-intensive nature and unionized workforce,
increased competition as well as strict railroad regulation.
CSX Corp. retains a Zacks Rank #4 (Sell).
CSX CORP (CSX): Free Stock Analysis Report
GENESEE & WYO (GWR): Free Stock Analysis
KANSAS CITY SOU (KSU): Free Stock Analysis
NORFOLK SOUTHRN (NSC): Free Stock Analysis
To read this article on Zacks.com click here.