CSX (CSX) Stock Falls Despite Positive Earnings, Dividend Increase

NEW YORK (TheStreet) -- CSX (CSX) was falling 0.5% to $28.14 in after-hours trading Tuesday despite beating analysts' estimates in earnings and increasing its quarterly dividend by 7%.

For the first quarter the railroad company posted earnings of 40 cents a share. Analysts surveyed by Thomson Reuters expected earnings of 37 cents a share, which the company beat by 3 cents. Revenue grew 2% from the year-ago quarter to $3 billion.

CSX said that operating income declined 16% to $739 million due to the harsh winter. The company estimated that weather-related disruptions increased expenses by about 6 cents a share, and impacted revenue contribution by about 2 or 3 cents.

The company also declared a 16 cent a share quarterly dividend, a 7% increase from its previous dividend. The dividend is payable on June 13 to all shareholders of record as of May 28.

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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 revenue growth, reasonable valuation levels, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • CSX's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $768.00 million or 19.62% when compared to the same quarter last year. In addition, CSX CORP has also modestly surpassed the industry average cash flow growth rate of 10.42%.
  • CSX CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CSX CORP increased its bottom line by earning $1.83 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.83).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • You can view the full analysis from the report here: CSX Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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