This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

CSX Earnings Will Show A Mixed Picture But Fundamentals Are Intact

NEW YORK ( Trefis) -- CSX (CSX) is going to release its quarterly results for the second quarter on Tuesday. We expect to see the results of a decline in coal freight volumes during the quarter.

This could be partly offset by its industrial freight division as petroleum and petroleum products grew by a staggering 47.9% year-over-year during the quarter, and the automotive sector benefited heavily from a 24.6% year-over-year growth in the motor vehicle & parts freight, as per data reported by Association of American Railroads.

Agricultural freight slid because of reduced grain volumes, but Intermodal freight continued its steady growth in the second quarter. We expect mixed results for CSX this quarter.

Let's look in more detail the emerging trends that are expected to impact CSX's earnings and valuation.

We have a $25 price estimate for CSX, which is around 10% above the current market price. (See our full analysis for CSX here .)

Industrial Freight, Intermodal to Drive Growth

Overall U.S. freight rail carloads have been declining quarter over quarter while intermodal freight has gradually grabbed more of the freight share at the expense of U.S. rail traffic. During the first quarter, total carloads declined by 3.2%, whereas intermodal volumes increased by 4%.

This transition in U.S. freight traffic from railroad to intermodal is going to have a significant impact on CSX's first-quarter earnings as well as value because CSX derives nearly 13% value from its Intermodal freight division. It's imperative for CSX to invest heavily on intermodal facilities.

In first-quarter 10-Q filing, CSX mentioned about ongoing intermodal expansion plans that includes a new intermodal terminal in Louisville, Kentucky and major terminal expansion projects in Worcester, Mass., and Columbus, Ohio. We expect, CSX to have spent considerably in intermodal facilities even in the second quarter.

CSX directly competes in the east coast with Norfolk Southern (NSC), which gets higher revenue from intermodal freight compared to CSX. We expect CSX to report sound revenue growth in intermodal freight in the second quarter and gain market share in U.S. rail intermodal units going forward.

CSX's industrial freight division caters to transportation of petroleum products, automotives (finished products and parts), plastics, primary metals, and housing & consumer goods. Petroleum products and automotive goods had a phenomenal growth during the quarter, which would drive revenue for this division.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs