CSX To Post A Strong Quarter Despite Changes In The Top Management

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CSX Corporation (NASDAQ:CSX), the Florida-based railroad company, is set to release its financial performance for the December quarter and full year 2017 after the market close on 16th January 2018 [1]. The market expects the company to post an improvement in its revenue, driven by a strong rebound in coal and metal shipments. However, the growth in CSX’s top-line may be subdued compared to its peers, as the company has been trying to cope with newer ways of operating laid down by the late Hunter Harrison, CSX’s CEO who passed away last month. That said, the railroad company’s efforts to bring down its operating ratio is likely to be reflected in the surge in its adjusted earnings.

See Our Complete Analysis For CSX Corporation Here

Key Trends Witnessed During 4Q’17

  • According to CSX’s weekly shipment data, the growth in coal shipments slowed down during the fourth quarter. Yet, the company managed to grow its coal shipments by close to 5% during the year, driven by the rebound in demand for coal due to the rising natural gas prices and favorable government policies.
  • Further, the company’s intermodal shipment volumes, which represents the shipments of containerized cargo both for domestic and international markets, continued to expand at a steady rate, taking the full year growth rate to 2.2% on a year-on-year (y-o-y) basis.

  • However, this growth was more than offset by the decline in the agricultural, petroleum, and auto shipments, which pulled down the company’s overall shipments by 1.4% for the full year 2017.
  • Apart from this, the average Brent crude oil prices (calculated based on two-month lagged prices) for the December quarter increased almost 14% on a sequential basis, and 16.5% on an annual basis. On a full year basis, the oil prices improved over 25% on a y-o-y basis. As a result, the company is likely to experience a jump in its fuel surcharge revenue for the quarter as well as full year, which will boost its top-line performance.

  • Similar to the last quarter, we expect CSX to rationalize its workforce and improve the productivity of its operations to bring down its operating ratio. The company expects the ratio to be at the high end of the mid-60% by the end of this year. Also, the company anticipates its 2017 earnings per share to grow by 20%-25% compared to the 2016 number.

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Notes:
  1. CSX Corporation Announces Dates For Fourth-Quarter Earnings Release and Earnings Call, CSX News Release []
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