How Is CSX Corporation Likely To Have Fared In Q2? 

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CSX Corporation (NYSE: CSX)  is set to release its Q2 financial performance on July 16. We expect the company to post low single-digit top line growth, primarily led by its Merchandise division, while Coal, and Intermodal could remain soft, given the rationalization of lanes, and an overall lower coal production. However, earnings could grow in high single-digits, led by a mix of higher revenues, slight improvement in margins, and lower share count. You can look at our interactive dashboard analysis ~ What To Expect From CSX Corporation’s Q2? ~ for more details. In addition, you can see more of our data for industrial companies here.

What Are The Key Sources of CSX Corporation’s Revenue?

  • CSX Corporation generates its revenues primarily from various commodities freight, clubbed under three key segments ~ Merchandise, Coal, and Intermodal.
  • Merchandise segment, which includes the shipment of merchandise commodities, including agriculture, metals, paper, chemicals, and automotive related goods, generated revenues of $7.5 billion in 2018, representing over 60% of the company’s total revenues.
  • Coal segment revenues of $2.3 billion in 2018 contributed a little under 20% to the company’s top line.
  • Intermodal, which refers to the shipment of containers that can be moved from one form of transport to another, generated revenues of $1.9 billion in 2018, accounting for over 15% of the company’s total revenues.

CSX Corporation’s Revenues Have Largely Been Trending Higher In The Recent Quarters

  • Total Revenues for CSX have largely trended higher over recent quarters, growing from $2.9 billion in Q1 2018 to $3.0 billion in Q1 2019.
  • The growth in 2018 was largely led by capacity constraints in the trucking industry, which benefited railroad companies at large.

CSX’s Revenue Growth In The Recent Quarters Have More Or Less Been Similar To That of Other Railroad Companies

 

  • CSX Corporation’s revenue grew at an average rate of 1.1% over the last 5 quarters.
  • Union Pacific’s revenue grew at an average rate of 1.0% during the same period.
  • Norfolk Southern’s revenue grew at an average rate of 1.3% over the last 5 quarters.

Revenue Growth For CSX Will Likely Be Led By Merchandise Freight Growth In Q2

  • Coal freight revenues could see a slight decline as volume could be impacted by the overall lower production. However, the company recently received one key contract from one of its competitors, which could offset some of the declines associated with overall weakness in coal production. Also, thermal coal exports did well in Q1, and it will be interesting to see if the trend continued into Q2.
  • CSX’s Intermodal revenues will likely trend down in the near term, as the company has been working toward  rationalization of its lanes, which is expected to impact its total shipments.
  • Merchandise freight revenue will likely see mid-single digit gains, led by higher volume, amid improved service levels, a trend seen in Q1 as well.

Earnings Will Likely Grow In High Single-Digits In Q2, Aided By Higher Revenues, Slight Improvement In Margins, And Lower Share Count.

  • We forecast the earnings to grow from $1.01 per share in Q2 2018 to $1.11 in Q2 2019, reflecting a 9.9% growth.
  • Earnings growth will likely be led by slight improvement in margins, as the company should benefit from its improved service levels, along with higher revenues and a lower share count.
  • Our earnings estimate is in line with the consensus estimate for CSX’s Q2 of $1.11.

 

 

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