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Can CSX Beat Analysts’ EPS Estimates in 2Q17?

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Analysts’ 2Q17 earnings estimate

The analysts surveyed by Reuters estimate that CSX Corporation (CSX) will see EPS (earnings per share) of $0.6 in 2Q17. On a YoY (year-over-year) basis, this would mean a 35% rise.

For the past four quarters, CSX’s EPS has been $1.9, but for the next four quarters, analysts are pegging the EPS at $2.4. The 23% estimated rise in CSX’s EPS over the next four quarters puts significant pressure on the company’s gains from the implementation of its precision schedule railroading program.

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Will CSX deliver higher per share earnings?

Although volumes remain favorable for CSX, its pricing ability is still under pressure. With strong competition from trucking, margin gains in the intermodal business remain in question. In its 2017 outlook, CSX hopes to achieve 25% growth in annual EPS on its 2016 reported EPS base of $1.81.

Under its precision schedule railroading program, CSX has already taken several measures, including reducing train counts and minimizing customer transit times. The company’s investor presentation in June 2017 also showed a substantial reduction in transit time variability.

On the interest expenses front, debt reduction should reduce CSX’s interest expenses in coming quarters, and its new $1.0-billion share repurchase program announced in April 2017 is expected to reduce the total number of shares outstanding, which should push up CSX’s EPS.

Peers’ expected 2Q17 EPS

Analysts expect CSX’s closest competitor, Norfolk Southern (NSC), to report 21.4% higher earnings YoY (year-over-year) at $1.6 per share for 2Q17. Union Pacific (UNP) is anticipated to report 18.4% higher earnings on a yearly basis at $1.4 per share, while Kansas City Southern (KSU) is projected to report 4% higher earnings at $1.3 per share.

Investors interested in exposure to industrial stocks can consider investing in the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR). All the major railroads in the US together account for 5.3% of FXR’s total holdings.

Now let’s turn to the analysts’ ratings of CSX ahead of its 2Q17.

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