CSX in Neutral Lane - Analyst Blog
August 23 2013 - 4:00PM
Zacks
On Jul 29, we maintained our
Neutral recommendation on CSX Corporation (CSX).
The company is characterized by strong Merchandise and Intermodal
segments along with recovery of the construction sector and
expansion of network and terminal capacity. However, the company’s
performance in the near term might be impacted by certain
headwinds. This Jacksonville-based leading transportation firm
carries a Zacks Rank #3 (Hold).
Why Maintained?
We believe that favorable rail industry pricing and operational
improvement will aid CSX’s top-line growth and drive earnings going
forward. Management aims to lower its operating ratio in the high
60s range by 2015 and to mid-60s in the long term, aided by volume
expansion, cost control measures and pricing gains.
Management has adopted a number of strategic steps to achieve a
high productivity level in the coming days. These include
improvement in car cycle times and reduction in overtime and other
associated labor costs, enabling the company to lower rent expense,
materials usage and labor cost per employee while delivering a
superior service to customers.
We also appreciate CSX’s consistent investments in expanding
network and terminal capacity, and enhancing safety, service and
reliability for its customers. Additionally, the company enjoys a
number of collaborations with the regulatory bodies and displays a
healthy financial position.
However, suppressed coal revenues, higher depreciation expenses and
labor inflation will likely cloud these positive effects. Further,
competitive pressure, a unionized workforce and increased railroad
regulation will also pose significant threats to the company’s
growth.
For the third and fourth quarters of 2013, the respective Zacks
Consensus Estimate for earnings is 43 cents and 42 cents per share.
This reflects year-over-year decline of 3.3% and 1.5%,
respectively.
Other Stocks
Companies operating within the sector that are worth taking note of
include AMERCO (UHAL) with a Zacks Rank #1 (Strong
Buy). American Railcar Industries Inc. (ARII) and
Trinity Industries Inc. (TRN) are Zacks Rank #2
(Buy) stocks.
AMER RAILCAR (ARII): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
TRINITY INDS IN (TRN): Free Stock Analysis Report
AMERCO INC (UHAL): Get Free Report
To read this article on Zacks.com click here.
Zacks Investment Research
American Railcar (NASDAQ:ARII)
Historical Stock Chart
From Jun 2024 to Jul 2024
American Railcar (NASDAQ:ARII)
Historical Stock Chart
From Jul 2023 to Jul 2024