A month has gone by since the last earnings report for CSX (CSX). Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CSX due for a pullback? Before we dive into how investors and analysts have reacted as 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.
Earnings Miss at CSX in Q3
CSX's third-quarter 2024 earnings per share of 46 cents fell short of the Zacks Consensus Estimate by two cents. However, the bottom line increased on a year-over-year basis on the back of higher revenues as freight volumes grew.
Total revenues of $3.62 billion increased 1% year over year driven by merchandise pricing gains and growth in intermodal and merchandise volumes. The positives outweighed the negatives like low coal revenues, reduced fuel surcharge and lower other revenues.
The third-quarter operating income increased 7% to $1.35 billion. Total expenses were up 2% year over year to $2.3 billion. This increase in operating expenses was due to the 21% increase in fuel costs to $276 million. Overall volumes increased 3% year over year.
Segmental Performance
Merchandise revenues improved 6% year over year to $2.23 billion in the reported quarter. Merchandise volumes rose 3% year over year to $683 million. Segmental revenue per unit increased 2%.
Intermodal revenues decreased 2% year over year to $509 million. Segmental volumes increased 3% while revenue per unit decreased 5%.
Coal revenues fell 7% year over year to $553 million in the reported quarter. Coal volumes decreased 2%. Segmental revenue per unit fell 5%.
Trucking revenues totaled $214 million, down 2% year over year. Other revenues plunged 15% to $112 million in the reported quarter.
Liquidity
CSX exited the third quarter of 2024 with cash and cash equivalents of $1.64 billion compared with $1.35 billion at the end of 2023. Long-term debt totaled $18.53 billion compared with $17.97 billion at the end of 2023.
CSX generated $3.86 billion of cash from operating activities in the reported quarter. Free cash flow came in at $2.22 billion (before payment of dividends).
Outlook
CSX expects a current-year capex of approximately $2.5 billion (excluding the rebuild of infrastructure damaged by recent hurricanes).
Management expects volumes to grow modestly in the final quarter of 2024. Revenues in the fourth quarter are likely to be down moderately (approximately by $200 million) due to lower fuel prices and softer coal markets.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -10.61% due to these changes.
VGM Scores
At this time, CSX has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise CSX has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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