Yahoo Finance CSX (CSX) Up 3.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for CSX (CSX). Shares have added about 3.3% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Earnings Miss at CSX in Q2
CSX’s earnings of 65 cents per share missed the Zacks Consensus Estimate of 67 cents. Moreover, the bottom line plunged 39.8% year over year due to a drop in revenues. Total revenues of $2,255 million also lagged the Zacks Consensus Estimate of $2,306 million and declined 26.3% year over year owing to coronavirus-led volume declines.
Second-quarter operating income fell 37% to $828 million. Operating ratio (operating expenses as a percentage of revenues) deteriorated to 63.3% from 57.4% in the prior-year quarter as a result of low revenues. Notably, lower the value of the metric, the better. Total expenses declined 19% year over year in the reported quarter.
Segmental Performance
Merchandise revenues plummeted 22% year over year to $1,508 million in the quarter under review. Merchandise volumes also declined 22%.
Coal revenues plunged 48% year over year to $287 million in the reported quarter. Coal volumes contracted 44% due to lower domestic and export coal volumes.
Moreover, Intermodal revenues slid 18% year over year to $359 million. Volumes declined 11% with both domestic and international volumes dwindling due to coronavirus-led global economic impacts.
Other revenues too fell 19% to $101 million in the reported quarter.
Liquidity & Share Buyback
The company exited the second quarter with cash and cash equivalents of $2,391 million compared with $958 million at the end of December 2019. Long-term debt totaled $16,128 million compared with $15,993 million at 2019-end. As of Jun 30, 2020, net cash provided by operating activities was $2,184 million, compared with $2,267 million in the year-earlier period.
As of Jun 30, 2020, CSX repurchased 10 million shares for $616 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, CSX has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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