) reported fourth quarter 2013 earnings of 42 cents per share,
missing the Zacks Consensus Estimate by a penny and deteriorating
from the year-ago figure of 43 cents. For full-year 2013,
earnings per share increased 2% year over year to $1.83.
The company's fourth quarter revenues of $3,032 million were
marginally ahead of the Zacks Consensus Estimate of $3,012
million and increased 5% year over year buoyed by the strength in
Merchandise and Intermodal markets. Revenues for the year
improved 2% year over year to $12,026 million.
Despite mixed results, shareholders' Coal concerns are
apparent as the stock declined 3.18% in after market trade on
Nasdaq on Wednesday.
Fourth quarter operating income remained flat year over year
at $813 million, resulting in operating ratio (defined as
operating expenses as a percentage of revenues) of 73.2%, up 140
basis points (bps). Operating expense increased 7% year over year
to $2,219 million.
For the full year, operating income rose 0.3% year over year
to $3,473 million resulting in an operating ratio of 71.1%, up 50
bps. Operating expense increased 3% year over year to $8,553
Performance Across Business Lines
revenues increased 10% year over year to $1,819 million in the
reported quarter driven by a 7% expansion in volume and 3%
improvement in revenue per unit (RPU). Volume growth was
supported by Agricultural Products (up 16%), chemicals (up 18%),
waste and Equipment (up 11%) partially offset by Phosphates and
Fertilizer (down 6%).
revenues were down 9% year over year at $679 million on 5% volume
decline and a 4% RPU decline. Lower domestic coal shipments
due to higher utility stockpiles and low natural gas prices
contributed to the decline. This was partially compensated by
Export coal, which experienced increased shipments of U.S.
metallurgical coal to overseas markets from last year.
revenues rose 10% year over year to $437 million driven by
highway-to-rail conversions in the domestic market, increase in
service lanes and customer addition. International intermodal
business also performed well on continuous strength in existing
customers. On a year-over-year basis, volumes increased 11% while
ARPU declined 1%.
revenues were $97 million, up 9% year over year.
The company exited 2013 with cash and cash equivalents of $592
million compared with $784 million at the end of 2012. Long-term
debt decreased to $9,022 million from $9,052 million at the end
CSX have a favorable expectation from the majority of its
markets in 2014. Despite a volatile coal market, CSX aims to
bring down its operating ratio to the high 60s range by 2015 and
subsequently to the mid 60s.
We believe CSX has a number of profit generating factors that
include favorable rail industry pricing, recovery of the
construction sector, ongoing truck to rail conversion as well as
expansion of network and terminal capacity. Additionally, the
company's focus on operational improvement will likely drive
However, a subdued coal business that is resulting in
declining domestic coal volumes as well as regulatory and
competitive issues could hurt the company's performance in the
near term. CSX currently carries a Zacks Ranks #3 (Hold).
Other stocks that are worth considering within this sector are
Heartland Express Inc.
Arkansas Best Corporation
Marten Transport Limited
). All these stocks currently hold a Zacks Rank #2 (Buy).
ARKANSAS BEST (ABFS): Free Stock Analysis
CSX CORP (CSX): Free Stock Analysis Report
HEARTLAND EXP (HTLD): Free Stock Analysis
MARTEN TRANS (MRTN): Free Stock Analysis
To read this article on Zacks.com click here.