19 Jan

CSX’s 4Q16 Earnings Beat Analysts’ Estimates, But It Fell 3.2%

WRITTEN BY Samuel Prince

CSX’s 4Q16 earnings

On January 17, 2017, Eastern US freight rail giant CSX Corporation (CSX) reported its 4Q16 earnings. The company conducted an earnings call with the investor community on January 18, 2017, to discuss results of its operations.

CSX reported EPS (earning per share) of $0.49 in the quarter, beating Wall Street analysts’ consensus estimate of $0.48 by 2%. The company’s 4Q16 EPS rose 2.1% compared to its level of $0.48 in 4Q15.

CSX’s 4Q16 Earnings Beat Analysts’ Estimates, But It Fell 3.2%

Stock price reaction

Note that on January 13, 2017, CSX clocked a 52-week high to close at $38.8. Following CSX’s earnings announcement, its stock fell 3.2% on January 18 to close at $36.9. On the same day, the iShares Transportation Average ETF (IYT), which tracks major US railroads and trucking companies, rose a marginal 0.4%. CSX forms 3.1% of the portfolio holdings of IYT.

Let’s compare the last three months’ stock prices of all Class I railroad companies to gain a deeper insight into their returns:

  • CSX returned 18.8%.
  • Norfolk Southern (NSC) returned 15.7%.
  • Union Pacific (UNP) returned 7.3%.
  • Canadian Pacific Railway (CP) returned -5.4%.
  • Canadian National Railway (CNI) returned 4.2%.
  • Genesee & Wyoming (GWR) returned 5.9%.

Is a CSX-CP deal in the works?

While CSX’s results garnered interest, another significant development drew the railroad industry’s attention. E. Hunter Harrison, CEO of Canada’s second-largest freight rail company, Canadian Pacific, announced his retirement from CP on January 18, 2017. Along with CP’s other former CEO, Paul Hilal, Harrison is reportedly pursuing opportunities involving other Class 1 railroad companies with an eye on CSX.

Note that in 4Q15, Harrison-led CP targeted Norfolk Southern, which outright rejected three different proposals. In fact, at the end of 2014, Harrison made a similar attempt to acquire CSX, but things couldn’t materialize.

In this series, we’ll go through CSX’s 4Q16 earnings in detail and discuss the company- and industry-specific factors that could affect its earnings over the next year. We’ll cover the results of CSX’s important segments and note its operating margins.

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