Here’s What To Expect From CSX’s Q1

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CSX Corporation (NYSE: CSX) is scheduled to report its Q1 2023 results on Thursday, April 20. We expect CSX to post revenue and earnings slightly above the street expectations, as the company should continue to benefit from better price realization. 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 be slightly above the consensus estimates

  • Trefis estimates CSX’s Q1 2023 net revenues to be around $3.62 billion, reflecting a 6% y-o-y growth and marginally above the $3.59 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.
  • The company should benefit from robust coal and merchandise freight demand.
  • Looking back at Q4, the company reported a 9% rise in revenue to $3.73 billion, led by a good 11% rise in average revenue per carload, while the total volume of carloads was down 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 Q1 2023 earnings per share (EPS) is expected to be $0.45 per Trefis analysis, slightly above the consensus estimate of $0.43.
  • CSX’s net income of $1.0 billion in Q4 2022 reflected a 9% rise from its $934 million figure in the prior-year quarter, as sales growth was partly offset by an 80 bps decline in operating ratio. Our CSX Operating Income Comparison dashboard has more details.
  • For the full-year 2023, we expect the adjusted EPS to be lower at $1.92 compared to $1.95 in 2022.

(3) CSX stock looks reasonably valued

  • We estimate CSX’s Valuation to be around $33 per share, which reflects an 8% premium to the current market price of $30.
  • At its current levels, CSX is trading at 16x its forward earnings estimate of $1.92, compared to the last three-year average of 17x, implying that CSX stock has little room for growth.
  • However, if CSX reports upbeat Q1 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 1% this year. 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 Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 CSX Return 2% -1% 156%
 S&P 500 Return 1% 8% 86%
 Trefis Multi-Strategy Portfolio 1% 9% 245%

[1] Month-to-date and year-to-date as of 4/14/2023
[2] Cumulative total returns since the end of 2016

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