Will CSX Stock Rise Post Q4 Results?

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CSX Corporation (NYSE: CSX) is scheduled to report its Q4 2022 results on Wednesday, January 25. We expect CSX to post revenue and earnings above the street expectations. The company should continue to benefit from a shift toward lower-cost transportation alternatives. However, our forecast indicates that CSX stock has little room for growth, as discussed below. Our interactive dashboard analysis of CSX Earnings Preview has additional details.

(1) Revenues expected to align with the consensus estimates

  • Trefis estimates CSX’s Q4 2022 net revenues to be around $3.82 billion, reflecting an 11.5% y-o-y growth and slightly above the $3.72 billion consensus estimate.
  • Higher inflation has resulted in some shippers turning to low-cost alternatives, such as railroads. With rising costs, the company should be able to expand its average revenue per carload, boding well for its top-line growth.
  • Looking back at Q3, the company reported an 18% rise in revenue to $3.9 billion, led by a solid 18% rise in average revenue per carload, while the total volume of carloads was up 2%.
  • Our dashboard on CSX Revenues has details on the company’s segments.
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(2) EPS likely to be above the consensus estimates

  • CSX’s Q4 2022 earnings per share (EPS) is expected to be $0.52 per Trefis analysis, comfortably above the consensus estimate of $0.46.
  • CSX’s net income of $1.1 billion in Q3 2022 reflected a 14.8% rise from its $968 million figure in the prior-year quarter, as sales growth was partly offset by a 310 bps decline in operating ratio.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $2.00 compared to $1.68 in 2021 and an estimated $1.92 in 2022.

(3) CSX stock looks reasonably valued

  • We estimate CSX’s Valuation to be around $34 per share, which reflects a 6% premium to the current market price of $32.
  • This represents a forward P/E ratio of 17x based on our $2.00 EPS forecast for CSX, compared to the last three-year average of 19x, implying that CSX stock has little room for growth.
  • However, if CSX reports upbeat Q4 results and provides a 2023 outlook better than the street estimates, it is likely that the P/E multiple will be revised upward, resulting in higher levels for CSX stock.

While CSX stock looks appropriately priced, it is helpful to see how CSX’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for CSX vs. Amerco.

With inflation rising and the Fed raising interest rates, among other factors, CSX stock has fallen 7% in the last twelve months. Can it drop more? See how low CSX stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 CSX Return 3% 3% 168%
 S&P 500 Return 5% 5% 80%
 Trefis Multi-Strategy Portfolio 10% 10% 245%

[1] Month-to-date and year-to-date as of 1/23/2023
[2] Cumulative total returns since the end of 2016

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