Will CSX Stock Be Affected by Gloomy Q4 Earnings Forecast?
NEW YORK (TheStreet) -- CSX Corp. (CSX) - Get Report earlier today said that it expects fourth quarter 2015 profits to decrease slightly compared to a year ago.
Analysts are expecting a 3% year-over-year drop to 48 cents a share, according to the Wall Street Journal.
"While we expect the energy market headwinds to continue in 2016, we are focused on capturing opportunities in intermodal and industrial markets, and on delivering excellent service for customers to support our pricing, growth and efficiency targets," CFO Frank Lonegro stated.
However, the Jacksonville, FL-based railroad operator is still expecting a mid to single digit full year earnings per share increase as intermodal growth and efficiency initiatives offset about $450 million in coal sales declines.
Looking ahead, CSX also forecasts a "meaningful margin expansion" in 2015.
On Tuesday, CSX shares are gaining 0.36% to $27.88.
Separately, TheStreet Ratings team rates CSX CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate CSX CORP (CSX) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has slightly increased to $930.00 million or 8.51% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.71%.
- CSX CORP's earnings per share improvement from the most recent quarter was slightly positive. 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 ($2.00 versus $1.93).
- 42.02% is the gross profit margin for CSX CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.25% trails the industry average.
- You can view the full analysis from the report here: CSX