CSX (CSX) Up 3.4% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for CSX (CSX). Shares have added about 3.4% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is CSX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Earnings Beat at CSX in Q3

CSX Corporation’s third-quarter 2021 earnings of 43 cents per share surpassed the Zacks Consensus Estimate of 38 cents. The bottom line surged 34.4% year over year owing to higher revenues.

Total revenues of $3,292 million outperformed the Zacks Consensus Estimate of $3030.9 million. The top line jumped 24.3% year over year owing to growth across all its businesses and revenues from Quality Carriers, which the company acquired in July.

Third-quarter operating income climbed 26% to $1,436 million. Operating ratio (operating expenses as a percentage of revenues) improved to 56.4% from 56.9% in the prior-year quarter despite operating expenses increasing 23% year over year. With respect to this metric, lower the value, the better.

CSX continues to expect double-digit revenue growth (excluding benefits from Quality Carriers transaction) in 2021. Capital expenditures are still anticipated in the band of $1.7 billion-$1.8 billion for 2021.

Segmental Performance

Merchandise revenues climbed 6% year over year to $1,881 million in the quarter under review. However, merchandise volumes dipped 2% from the year-ago period.

Coal revenues ascended 39% year over year to $460 million in the reported quarter. Coal volumes rose 16% with increase in both domestic and export coal volumes.

Intermodal revenues augmented 14% year over year to $509 million. Volumes increased 4% due to higher international shipments, thanks to strong demand, inventory replenishments and growth in rail volumes from east coast ports.

Other revenues jumped 81% to $538 million in the reported quarter.

Effective from third-quarter 2021, CSX introduced a new segment — Trucking — which comprises of the operations of Quality Carriers. Revenues from the segment totaled $200 million.

Liquidity & Share Buyback

This company exited the third quarter with cash and cash equivalents of $2,179 million compared with $3,129 million at the end of December 2020. Long-term debt totaled $16,182 million comparedwith $16,304 million at 2020-end. As of Sep 30, 2021, net cash provided by operating activities was $3,819 million compared with $3,128 million in the year-earlier period.

As of Sep 30, 2021, CSX repurchased 74 million shares for $2,316 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, CSX has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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