Railroad operator CSX Corp. (CSX) is slated to release its third-quarter earnings after the market's close Today. On average, 20 analysts surveyed by Thomson Reuters expect the company to post earnings of $0.71 per share for the quarter, with estimates ranging between $0.63 and $0.77 per share. Analysts' estimates typically exclude special items. Revenues for the quarter are estimated to be $2.32 billion, representing a 21.5% decline from last year.
In the same quarter a year ago, the Jacksonville, Florida-based company had recorded net earnings of $382 million or $0.94 per share, on revenues of $2.96 billion.
While announcing the second-quarter results, Michael Ward, president, chairman and Chief Executive Officer of CSX, said, "While the economy continues to significantly impact our business, there are some signs that we may be seeing the bottom in many markets. Even in this difficult business environment, we are still strengthening our operations, optimizing our resources and making the right investments to prepare our network for the future."
Association of American Railroads, or AAR, a railroad policy, research and technology organization, recently reported that current rail traffic continues to reflect down economy. In the month of September, U.S. Freight railroads fell 14.2% from last year. Rail-car loadings began dropping last fall, as world-wide trade lurched lower. However, September's decline was the smallest in percentage terms since December, indicating that the economy might be showing signs of a rebound.
According to an AAR report, CSX's total traffic for the quarter to date, through September 26, 2009, dropped 15.3% to 1.36 million from 1.60 million in the same period last year. Total carloads fell 17.7% year-over-year to 919,625, with sharp falls in most of the segments, despite Farm Products that recorded a 35.2% growth in traffic. Total Intermodal traffic was down 9.6% to 435,892, with a 27.5% fall in trailers and 7.1% decline in containers.
AAR also stated that for the 38 weeks ended September 26, U.S. railroads reported cumulative volume of 10.10 million carloads, down 18.2% from 2008. Canadian railroads volume declined 15.1%, and Mexican railroads' originated volume dropped 8.9%. Combined North American rail volume for the first 38 weeks of 2009 on 13 reporting U.S., Canadian and Mexican railroads totaled 12,840,626 carloads, down 18.9% from last year. For the 38 weeks, CSX's total Traffic dropped 17.6% to 4.18 million, and total carloads fell 20.1%.
Founded in 1978, CSX, which provides rail-based transportation services in North America, offers traditional rail service, and the transport of intermodal containers and trailers. It also provides coast-to-coast intermodal transportation services linking customers to railroads, through trucks and terminals. The company's transportation network spans about 21,000 miles with service to 23 eastern states and the District of Columbia, and connects to more than 70 ocean, river and lake ports.
In the preceding second quarter, CSX had reported a decline in net earnings to $308 million or $0.78 per share from last year's $385 million or $0.93 per share, hurt by a 21% decline in volume as well as lower fuel surcharge recovery, amid a broad-based weakness in the economy. Earnings from continuing operations declined 24% to $0.72 per share from $0.95 per share last year, and revenues declined 25% to $2.20 billion.
Among peers, Fort Worth, Texas-based Burlington Northern Santa Fe Corp. (BNI) is slated to release its third-quarter earnings on Thursday, October 22. Analysts expect the company to post earnings of $1.28 per share for the quarter, with estimates ranging between $1.17 and $1.40 per share, lower than last year's earnings of $1.91 per share. Revenues for the quarter are estimated to be $3.66 billion, representing a 25.3% decline from last year.
In an earlier statement, Burlington Northern president and chief executive officer, Matthew Rose said, "We are beginning to see BNSF's volumes stabilize in our more economic sensitive businesses, and because of our continued focus on productivity combined with our long-term market opportunities, we are well positioned to benefit when the economy recovers."
Norfolk, Virginia-based Railroad operator Norfolk Southern Corp. (NSC) would issue its third-quarter earnings results on Tuesday, October 27. Wall Street is projecting earnings of $0.79 per share for the quarter, with estimates ranging between $0.70 and $0.94 per share, lower than last year's earnings of $1.37 per share. Revenues for the quarter are estimated to be $2.06 billion, representing a 28.9% decline from last year.
Omaha, Nebraska-based rail transportation provider Union Pacific Corp. (UNP) is scheduled to release third quarter earnings on Thursday, October 22. Analysts expect the company to post earnings of $1.00 per share, with estimates between $0.89 and $1.09 per share, lower than last year's earnings of $1.38 per share. Revenues for the quarter are estimated to be $3.71 billion, representing a 23.5% decline from the prior year.
Union Pacific's chairman and chief executive officer, Jim Young recently said, "Although we expect it will be some time before the economy recovers, it appears that volume levels may have hit the bottom as the economy seems to have stabilized. Despite these economic challenges, we are dedicated to running a safe and productive network, maintaining our competitive advantages that come from excellent customer service and being a fuel efficient and an environmentally friendly railroad."
Another peer, Montreal-based Canadian National Railway Co. (CNI, CNR.TO) is to post third-quarter results on Tuesday, October 20. Analysts expect earnings of $0.81 per share for the quarter, with estimates ranging between $0.71 and $0.87 per share, down from prior year's $1.03 per share. Revenues for the quarter are estimated to be $1.86 billion, representing a 14.2% decline from last year.
In early September, CSX's Board of Directors approved a $0.22 per share quarterly dividend on the company's common stock. The dividend is payable on December 15, to shareholders of record at the close of business on November 30.
In an October 1 research note, Deutsche Securities initiated the coverage on CSX with a 'Buy' rating. On September 15, brokerage Stifel Nicolaus downgraded its rating on CSX to 'Hold' from 'Buy', while on September 3, BMO Capital Markets upgraded its rating on the company to 'Outperform' from 'Market Perform'.
CSX is currently trading at $45.16, up $0.25 or 0.56%. In the past 52 weeks, shares have been trading in a broad range of $20.70 to $53.84, with a 3-month average volume of 5.65 million shares.
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