A harsh winter has been tough on many publicly traded
companies, but perhaps nowhere more so than in the railroad
Still,CSX Corp. (
) is optimistic about future growth.
The company, with a market capitalization of $29 billion,
provides rail, intermodal and rail-to-truck transload services to
many different industries, including energy, industrial,
construction and agriculture.
Earlier this month, CSX said that Q1 earnings would be
negatively impacted by severe winter weather. Profit is expected
to rise only 3% this year.
However, earnings are expected to ramp up in 2015, rising 14%,
driven by investments in rail infrastructure and growth in
intermodal services. The company has been building facilities to
handle intermodal business, which includes shipping by truck,
rail or ship.
Lower coal demand has hurt earnings and sales growth at CSX
due to a shift to natural gas at U.S. power plants.
Fourth-quarter earnings rose 11% from a year ago while sales
rose 5% to $3.03 billion. Coal volumes fell 5% in the quarter,
resulting in a 9% revenue drop to $679 million. Shipments of
agriculture products, chemicals and intermodal shipping
containers all grew strongly. Intermodal sales rose 10%.
The U.S. oil boom continues to be good business for the
railroad industry overall. In 2013, U.S. railroad operators moved
407,643 carloads of crude oil, up 74% from 2012. CSX alone
carried 46,000 carloads of oil. That's supposed to increase by
50% this year.
In February, CSX declared a quarterly dividend of 15 cents a
share. It currently yields 2.1%.
CSX's chart continues to show relative price strength despite
less than ideal industry conditions. It's working on a
cup-with-handle pattern with a buy point of 29.29, although signs
of meaningful accumulation of the stock in recent weeks have been