Bear Of The Day: CSX (CSX)
Zacks Investment Research | Jan 30, 2020 06:33AM ET
CSX Corporation (NASDAQ:CSX) (CSX) saw its revenue fall in the fourth quarter as coal remains a headwind. This Zacks Rank #5 (Strong Sell) is expected to see little earnings growth in 2020.
CSX is an east coast railroad based in Jacksonville, Florida. It provides rail, intermodal and rail-to-truck transload services to customers in many markets including energy, industrial, construction, agricultural and consumer products.
A Beat in the Fourth Quarter
On Jan 16, CSX reported its fourth quarter 2019 results and beat the Zacks Consensus by $0.02, reporting $0.99 versus the consensus of $0.97.
It was the second beat in a row, after the company had posted a rare miss in the second quarter of 2019.
Revenue fell 8% to $2.89 billion due to lower volumes and a negative mix from coal market headwinds.
However, expenses fell 9% to $1.73 billion, drive by continued efficiency gains.
Guidance Light for 2020
Volumes are expected to be flat to down 2% in 2020 as coal is expected to remain a headwind at least through the first half of 2020.
As a result, the analysts have been lowering both 2020 and 2021 estimates.
For 2020, 7 estimates were lowered, and one raised, in the last 30 days which pushed the Zacks Consensus down to $4.20 from $4.46 just 90 days. That's earnings growth that is up just 0.7% as the company made $4.17 in 2019.
These cuts are the reason for the Zacks Rank of Strong Sell.
Estimates for 2021 were also cut in the last month, pushing the 2021 Zacks Consensus down to $4.54 from $4.79 during that time period. That's a rebound in earnings.
Shares Up Year-to-Date
Investors haven't soured on the rails, even as some have had a slowdown in volumes. CSX shares are up 5.9% year-to-date even as the estimates were being cut.
It still has attractive valuations, with a forward P/E of 18.1.
It also pays a dividend, currently yielding 1.3%.
The Zacks Rank is terrible in the entire industry. None of the railroads are a Zacks Rank #1 (Strong Buy) or #2 (Buy) stock.
Canadian Pacific Railway (CP), Kansas City Southern (NYSE:KSU) (KSU) and Norfolk Southern (NSC) have the best Ranks and all are Zacks Rank #3 (Holds).
Look for a turnaround in the earnings estimates on this group around the middle of the year.
Get The News You Want
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.