CSX 2Q profit down 20 percent as rail volume slows 9 percent

CHICAGO, July 13 CSX Corp, the third-largest USA railroad, on Wednesday reported a lower second-quarter net profit, driven by an overall decline in freight volumes of 9 percent.

CSX has, however, met or exceeded earnings expectations over the past three quarters, having responded to sector turmoil with tightening efficiency that has included layoffs and the mothballing of trains.

Analysts surveyed by Thomson Reuters expected earnings to decline 21% to 44 cents a share on revenue of $2.7 billion.

The company said it continued to expect full-year EPS to decline, “reflecting the ongoing transition in the energy markets, along with the impact of the strong US dollar and low commodity prices”. CSX reported Q2 revenues of $2.7 billion, down 12% but still enough to beat analyst expectations of $2.69 billion by a hair.

Currently, CSX has a Zacks Rank #3 (Hold), but it is subject to change following the release of the company’s latest earnings report. The shares climbed as much as 5.5 percent after the release, the biggest intraday increase since January 14.

“It was removed immediately”, Cost said in an e-mail.

We rate CSX CORP as a Buy with a ratings score of B. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Coal shipments fell 30 percent, extending its prolonged decline. Shipments dwindled to less than 20 percent in 2015 and shrank to 15 percent in the first quarter as power plants converted to cheaper, cleaner-burning natural gas. CSX also grappled with severe flooding in West Virginia that disrupted the Jacksonville, Florida-based railroad’s network.