Class I eastern railroad CSX (CSX) will report first quarter results this afternoon and host a call at 16:30 ET.
Analysts are looking for second quarter EPS up 36% to $0.87/share with revenue up 2% to $3.0 bln.
Management continues to focus on reducing costs and running the most efficient rail possible.
First quarter revenue was flat as a 4% decline in volume was offset by a 4% increase in pricing. Volume declines were mostly across the board. Still, the stock surged to new highs as expenses fell 13% and the lower tax rate boosted profits.
One would expect volumes to improve from the 4% decline in the first quarter given the strength in the economy. It appears CSX may be losing share as it focuses on margins given the fact its rival Norfolk Southern (NSC) grew volume 3% in the first quarter. Pricing should continue to be strong for the group as the transportation market remains tight.
CSX has guided for 2018 revenue up slightly (consensus +3%) with a solid step down in the operating ratio, driven by efficiency gains.
Longer term, CSX is targeting a 60% operating ratio by 2020 (vs. 69.4% in 2016) and three-year cumulative free cash flow of $8.5 bln through 2020 versus $3.4 bln in 2015-2017.
With a $56 billion market value, CSX trades at just over 19x earnings estimates, roughly in-line with the rail group. Fellow eastern Class I rail Norfolk Southern (NSC) trades at just under 18x earnings.
- Western US rails: Union Pacific (UNP), Berkshire's BNSF (BRK.B), KC Southern (KSU); regional Genesee & Wyoming (GWR).
- Canadian: Canadian Pcific (CP) Canadian National Railway (CNI)