CSX Corp. (CSX) Stock Lower After Kansas City Southern Lowers Revenue Guidance

CSX Corp. (CSX) is falling Monday following Kansas City Southern's (KSU) lower full year 2015 revenue guidance.
By Lindsay Ingram ,

NEW YORK (TheStreet) -- Shares of CSX Corp. (CSX) - Get Report were falling 3.8% to $33.83 Monday after competitor railroad company Kansas City Southern (KSU) - Get Report lowered its full year 2015 revenue guidance.

Kansas City Southern said it now expects low single-digit revenue growth for full year 2015, down from mid single-digit growth for the year.

The railroad operator said the decrease is due to slow year-to-date carload growth from the energy sector, the continued weakening of the Mexican peso compared to the U.S. dollar, and lower fuel surcharge revenues. The company said that linehaul revenue growth for all other commodity groups are in line with its previous guidance for the year.

Kansas City Southern said the slower than expected carload growth will result in a 4% decline in revenue for the first quarter of 2015.

Kansas City Southern's lower revenue guidance helped bring down shares of CSX and other railroad companies.

TheStreet Ratings team rates CSX CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CSX CORP (CSX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CSX CORP has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CSX CORP increased its bottom line by earning $1.93 versus $1.83 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.93).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.0%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $1,041.00 million or 35.54% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.77%.
  • You can view the full analysis from the report here: CSX Ratings Report
Loading ...