) reported third-quarter 2013 earnings of 46 cents per share,
beating the Zacks Consensus Estimate of 42 cents and improving
from the year-ago figure of 44 cents.
CDN PAC RLWY (CP): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
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The company's third-quarter revenues were $2,999 million, up 4%
from $2,894 million in the prior-year quarter. The results also
surpassed the Zacks Consensus Estimate of $2,965 million on
volume expansion and higher pricing along with improvement in
operating efficiency and services.
Operating income remained flat year over year at $854 million,
while operating expense was $2,145 million, down 5%. Operating
ratio (defined as operating expenses as a percentage of revenue)
was 71.5%, up 100 basis points.
Performance Across Business Lines
revenues increased 7% year over year to $1,719 million in the
reported quarter, supported by 2% growth in revenue per unit
(RPU) and 5% expansion in volumes. The improvement in volume was
driven by better performing Waste and Equipment (up 33%),
Chemicals (up 12%), Metals (up 5%) and Forest Products (up 5%).
revenues were down 9% year over year at $720 million on 7% volume
decline. RPU decreased 2% on a year-over-year basis. The weakness
was due to lower domestic coal shipments demand from power plants
softened and stocks piled up. Export coal also suffered a
significant setback due to lower shipments of U.S. thermal and
metallurgical coal following global oversupply and lower prices.
revenues rose 8% year over year to $431 million, driven by
highway-to-rail conversion in the domestic market as well as
increase in service lanes and customer base. On a year-over-year
basis, volumes increased 6% and RPU rose 2%.
revenues were $129 million, up 36% year over year.
The company exited the third quarter with cash and cash
equivalents of $591 million compared with $784 million at the end
of 2012. Long-term debt decreased to $8,787 million from $9,052
million at the end of 2012.
CSX expects marginal earnings per share growth in 2013 from the
prior-year level. Amid a sluggish economic environment and
volatile coal market scenario, 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, and expansion of network and terminal
capacity. Additionally, the company's focus on operational
improvement and rendering better services to customers at
affordable costs will likely drive profitability.
However, competitive pressure, a unionized workforce and
increased railroad regulation may pose significant threats to the
company's growth. CSX operates with other railroad companies like
Canadian Pacific Railway Ltd.
Norfolk Southern Corp.
Kansas City Southern
), and has a Zacks Ranks #3 (Hold).