Will CSX Beat Wall Street’s Earnings Estimates in 4Q17?



Analysts’ 4Q17 earnings estimate

In the previous part of this series, we analyzed CSX’s (CSX) estimated operating margins for 4Q17. Now, we’ll assess analysts’ estimates for CSX’s earnings in the quarter. Analysts polled by Thomson Reuters expected adjusted earnings per share (or EPS) of $0.57 for CSX in the fourth quarter of 2017. Compared with the EPS of $0.49 in 4Q16, this CHANGE represents a rise of 15.6% YoY (year-over-year).

For 2018, analysts anticipate that CSX will report EPS of $2.89—which is up 41.2% from estimated earnings of $2.04 per share in 2017.

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Will CSX exceed 4Q17 earnings estimate?

While shifting to the Precision Scheduled Railroading model, CSX encountered a lot of service issues. The company noted a systematic rise in customer complaints amid its turnaround plan. The magnitude of the complaints forced the company to issue new guidance after its 2Q17 earnings. CSX’s guidance was adjusted due to the disruptions. The earlier guidance stated EPS growth of ~25%, whereas the new guidance in October 2017 noted that EPS would grow 20%–25% of the reported base of $1.81 in 2016.

CSX’s interest expenses are expected to fall 11% to $138.8 million in 4Q17 from $156.0 million a year before. Plus, the stock buyback program should reduce the number of shares outstanding by 4.1%, which should drive the company’s net earnings in the fourth quarter 2017.

Peers’ estimated EPS in 4Q17

Arch rival Norfolk Southern (NSC) is anticipated to report 9.2% higher EPS in 4Q17. Major Western US railroad Union Pacific (UNP) is expected to post growth of 10.6% in 4Q17 EPS. The smallest US Class I railroad (IYJ), Kansas City Southern (KSU), is projected to report ~13.2% growth in earnings per share.

Analysts expect Canadian National Railway (CNI) to report ~5% lower earnings in 4Q17. In sharp contrast to CNI, its competitor Canadian Pacific Railway (CP) is anticipated to report a ~25% rise in its fourth-quarter 2017 EPS.

In the next part of this series, we’ll turn to Wall Street analysts for their recommendations on CSX and its peers.


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