CSX Shares Rise on Strong Quarter

Shares of rail operator CSX rise Wednesday after a strong earnings report.
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JACKSONVILLE, Fla. (

TheStreet

) --

CSX

(CSX) - Get Report

shares rose 4% Wednesday morning following quarterly results that beat Wall Street expectations on earnings and revenue.

The rail operator reported earnings per share of 78 cents, versus a Street estimate of 69 cents.

The number marks a 22% increase over the year-ago period's 64 cents.

Revenue in the first quarter came to $2.5 billion, CSX said, up 11% from the prior year and ahead of analysts' consensus forecast of just under $2.4 billion.

CSX, the first railroad company to report in the sector, serves as a read-through for industry-wide results as well as the rail sector's link to the economic recovery in the U.S.

Analysts, however, scrutinize the details inside the earnings reports to discern specific shipping trends.

Going into earnings season

analysts were looking for evidence of coal export growth from CSX, even as overall coal demand remained weak. Also, analysts were looking for growth in CSX's intermodal shipping business as a buffer against depressed coal demand. (Intermodal refers to any product other than coal carried by a railroad.)

While coal volume fell 15% compared with the same quarter of 2009, intermodal volume was up by 14% and intermodal revenue up 20%.

Coal exports rose 21% in the quarter over the same period last year, driven by demand from China, CSX said.

Recent indications from the rail sector have fueld optimism that rail traffic will continue to rebound over the next 12 months -- a Dahlman Rose survey of rail shippers this week indicated traffic growth of 9% -- even as coal demand remains relatively weak.

CSX said it had a record first quarter operating ratio of 74.5% and record first quarter operating income of $634 million.

Michael Ward, CEO of CSX, stated in the earnings release, "These results will enable the company to continue investing in its business to support the nation's growing demand for freight transportation, while driving shareholder value."

Analyst have been expecting railroaders to reinstate dividends or share-repurchase programs as the recovery takes hold,

CSX noted in its earnings release that it will invest $1.7 billion in its rail network in 2010. It wasn't more specific.

In midday trading Wednesday, shares of CSX were changing hands at $54.81, up $1.53, or 2.9%.

-Reported by Eric Rosenbaum in New York.

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