CSX (CSX) Up 7.7% Since Last Earnings Report: Can It Continue?

Core Viewpoint - CSX's third-quarter earnings report showed a mixed performance, with earnings per share missing estimates but revenues increasing year-over-year, driven by higher freight volumes and merchandise pricing gains [2][3]. Financial Performance - Earnings per share for Q3 2024 were 46 cents, falling short of the Zacks Consensus Estimate by two cents, but showing a year-over-year increase [2]. - Total revenues reached $3.62 billion, a 1% increase year-over-year, supported by merchandise pricing gains and growth in intermodal and merchandise volumes [3]. - Operating income rose 7% to $1.35 billion, while total expenses increased 2% to $2.3 billion, primarily due to a 21% rise in fuel costs [4]. Segmental Performance - Merchandise revenues improved 6% year-over-year to $2.23 billion, with merchandise volumes rising 3% [5]. - Intermodal revenues decreased 2% year-over-year to $509 million, despite a 3% increase in segmental volumes [5]. - Coal revenues fell 7% year-over-year to $553 million, with coal volumes decreasing by 2% [5]. - Trucking revenues totaled $214 million, down 2% year-over-year, while other revenues plunged 15% to $112 million [6]. Liquidity and Cash Flow - CSX ended Q3 2024 with cash and cash equivalents of $1.64 billion, up from $1.35 billion at the end of 2023, while long-term debt increased to $18.53 billion [7]. - The company generated $3.86 billion in cash from operating activities, with free cash flow at $2.22 billion before dividend payments [7]. Outlook - CSX anticipates capital expenditures of approximately $2.5 billion for the current year, excluding infrastructure rebuilds from recent hurricanes [8]. - Management expects modest volume growth in Q4 2024, but revenues are projected to decline by approximately $200 million due to lower fuel prices and softer coal markets [8]. - There has been a downward trend in estimates, with the consensus estimate shifting down by 10.61% [9]. Investment Scores - CSX has an average Growth Score of C, a Momentum Score of D, and a Value Score of D, placing it in the bottom 40% for the value investment strategy [10]. - The stock has an aggregate VGM Score of D, indicating a below-average return expectation in the coming months [11].