Why CSX (CSX) Is Down Today

Update (4:18 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- CSX (CSX) fell 6.81% to $27.24, down $1.99 from its previous close of $29.23, at the close of the trading day on Thursday after the company announced late Wednesday that fourth-quarter profit declined 5%.

The stock had a volume of 25,657,901, nearly five times its average of 5,465,690. It hit a high of $27.50 and a low of $26.76 for the day.

"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 revenue growth, solid stock price performance, attractive valuation levels, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

The company earned $426 million, or 42 cents a share, in the quarter, down from year-earlier earnings of $449 million, or 44 cents a share. CSX cautioned that it could prove difficult for the railroad company to reach its own profit goal of double-digit growth in the next two years because of weak demand for coal and because the company's results from last year included multiple one-time large benefits.

CSX also announced Thursday that it would increase crude oil shipments in 2014. CEO Michael Ward told analysts on Thursday that CSX expects to increase its crude oil shipments by rail by 50% in 2014. Ward said CSX shipped about 46,000 loads of crude oil in 2013, mostly to refiners on the East Coast, as the company sent out one train per day for the year but increased that to two trains per day mostly in the fourth quarter. The company plans to run two trains per day "and then we will start positioning ourselves as more and more of the unloading points along the East Coast are developed," Ward said, according to Reuters.

Argus upgraded the stock to buy from hold and set the target price at $35. The firm based its upgrade on the increased crude oil shipments, grain harvests that nearly set company records, increased demand for consumer finished goods and stabilization of coal shipments.

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

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

  • CSX's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.53% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CSX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 $1.79 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.79).
  • 37.71% is the gross profit margin for CSX CORP which we consider to be strong. Regardless of CSX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.43% trails the industry average.
  • You can view the full analysis from the report here: CSX Ratings Report

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