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Why Is CSX Down 2.9% Since the Last Earnings Report?

A month has gone by since the last earnings report for CSX CorporationCSX . Shares have lost about 2.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Second Quarter Earnings

CSX reported second-quarter 2017 earnings (excluding restructuring charge worth $122 million) of $0.64 per share, which beat the Zacks Consensus Estimate of $0.59. Also, quarterly earnings were 36.17% above the year-ago figure. Results were aided by higher revenues.

Revenues of $2,933 million outpaced the Zacks Consensus Estimate of $2,849.6 million, reflecting an improvement of 8.47% year over year owing to a 2% increase in overall volumes.Also, second-quarter operating income (on a reported basis) improved 14% year over year to $958 million.

While operating ratio (operating expenses as a percentage of revenues) contracted 220 basis points to 67.4% on a reported basis, operating expenses rose 6% year over year to $1,975 million, mainly due to restructuring charges. Adjusted operating income in the first quarter was $1,080 million. On an adjusted basis, the operating ratio for the reported quarter was 63.2%.

CSX continues to expect full-year operating ratio in the mid-60s and earnings per share growth of around 25% off the 2016 reported base of $1.81.

Segmental Performance

Merchandise revenues inched up 1% year over year to $1,798 million in the quarter.

Coal revenues surged 27% year over year to $530 million due to 7% expansion in volumes.

Intermodal revenues improved 7% year over year to $448 million. On a year-over-year basis, volumes increased 3%.

Other revenues grossed $157 million, up 62% year over year.

Liquidity

This company exited the second quarter with cash and cash equivalents of $620 million compared with $603 million at the end of 2016. Long-term debt totaled $11,806 million for the company, compared with $10,962 million a year ago.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter.

CSX Corporation Price and Consensus

CSX Corporation Price and Consensus | CSX Corporation Quote

VGM Scores

At this time, CSX's stock has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value investors based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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