Is A Beat In Store For CSX In Q4 Earnings On Cost-Cuts?
Zacks Investment Research | Jan 12, 2020 10:55PM ET
CSX Corporation (NASDAQ:CSX) is scheduled to report fourth-quarter 2019 results on Jan 16, after the market closes.
The Zacks Consensus Estimate for fourth-quarter earnings has been revised upward by approximately 1% in the past 90 days. Given this backdrop, let’s take a look at the factors that might have influenced the company’s quarterly performance.
CSX’s cost-control measures, courtesy of the precision scheduled railroading model are expected to get reflected in its bottom line. As has been the case over the last few quarters, the company’s operating ratio (operating expenses as a percentage of revenues) is expected to have improved in the fourth quarter owing to cost-containment initiatives.
However, persistent sluggishness in intermodal volumes is likely to have hampered the intermodal segment’s performance in the soon-to-be-reported quarter. The Zacks Consensus Estimate for intermodal revenues implies a 7.7% decline from the year-ago reported figure.
Additionally, coal volumes are expected to have been weak in the fourth quarter due to low domestic coal demand. The soft coal volumes in turn, are likely to have hurt coal revenues in the quarter. The consensus mark for coal revenues suggests a 24.4% plunge from the number reported in the fourth quarter of 2018.
In fact, the substantial weakness in coal volumes is expected to have weighed on overall volumes as well. Notably, at the 2019 Credit Suisse (SIX:CSGN) Industrials Conference, CSX stated that overall fourth-quarter volumes were down in excess of 15% as of Dec 3, 2019, primarily due to weakness pertaining to coal. The consensus mark for total volumes indicates a 6.6% decrease from the fourth-quarter 2018 reported number.
CSX Corporation Price and EPS Surprise
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