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CSX’s Q1 Earnings Rose Due to Higher Prices, Lower Costs

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Earnings beat expectations

CSX (CSX) shares rose more than 4% in the after-hours trading on April 16. The company reported strong first-quarter results. CSX’s revenues and earnings beat analysts’ forecasts and marked a significant YoY (year-over-year) improvement.

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The company’s first-quarter EPS of $1.02 was higher than analysts’ estimate of $0.91 and registered ~31% YoY growth. Higher revenues and lower costs mainly drove the first-quarter earnings. The company witnessed over 50% earnings growth in all of the four quarters in 2018.

The first-quarter revenues were $3.01 billion—marginally higher than analysts’ estimate of $3.00 billion. The quarterly revenues had 4.8% YoY growth due to a 5% rise in prices, increased fuel recoveries, a favorable mix, and higher other revenues.

CSX’s impressive quarterly results eased investors’ concerns that severe winter weather and global slowdown concerns would have a negative impact on US railroad companies’ (IYT) first-quarter results.

CSX’s adoption of a precision scheduled railroading system continued to help it lower costs and improve its operational efficiency. The company contained labor costs and fuel costs during the quarter, which helped it reduce its operating costs.

In the first quarter, the company’s expenses decreased 2% to $1.8 billion compared with the first quarter of 2018. As a result, CSX’s first-quarter operating ratio, which measures the operating expenses as a percentage of revenues, contracted by 420 basis points YoY to 59.5%. The company had a record first-quarter operating ratio.

Peers gained on upbeat performance

Most US railroad companies’ (IYT) shares rose in the after-hours trading on April 16. CSX reported strong first-quarter earnings results. Norfolk Southern (NSC), Kansas City Southern (KSU), and Union Pacific (UNP) shares rose 1.7%, 1.3%, and 0.6%, respectively, during the after-hours trading session on April 16.

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